Are Anti-Raiding Agreements Enforceable under the new Non-Competition Agreement Act?

Gordon Law Group — Wed, 31 May 2023 02:17:03 GMT

Massachusetts updated its rules on job restrictions. Specifically, a new act began on October 1, 2018. The goal was to guide fair non-compete terms. However, the law did not cover every agreement.

What the Act Covers and What It Does Not

The new act focuses on classic non-compete contracts. Yet, it excludes several common restrictions. For example, it does not apply to:

non‑solicitation agreements
confidentiality agreements
NDAs
invention assignment agreements

Additionally, it does not apply when a business is sold. Especially if the restricted person owns part of that business. Moreover, the act excludes owners who receive major payment from the sale.

A Key Court Decision That Defined Anti-Raiding Rules

Later, on January 14, 2020, the top state court evaluated anti-raiding terms again. The case involved a dealership group. The court reviewed a restriction that blocked a former exec from hiring staff for six months.

The court outlined a clear test. Namely, a restriction is reasonable when it:

Protects a real business interest
Has a fair time limit
Serves public interest
Uses limited space rules

Importantly, the court treated this as part of a business sale. Because of that, it applied lighter review. As a result, the court enforced the six-month rule.

Why Business Sale Agreements Face Less Criticism

Business sale restrictions face lower scrutiny than employee contracts. Still, the law checks if the rule protects real interests. It checks if the limit is fair. It also checks if the public is protected.

In contrast, employers face stricter review when restricting workers. But, reviewing owner restrictions is different. Because, courts expect owners to negotiate with more balance. Therefore, owner agreements are judged less harshly.

Anti-Raiding Agreements Today

Anti-raiding clauses can be enforced after a business sale. Provided that, they protect real interests. Likewise, the time must stay short. The space must stay reasonable. The public must stay protected.

In simple terms, the law allows short anti-raiding limits for business owners. It allows them if a business is sold. It allows them if the rule stays fair. So, ultimately, the court prefers balance, not punishment.

What This Means for Employees and Owners

Employees should learn contract impact early. Similarly, owners must check long-term career effects. Restrictions can block hiring. They can also block future business plans. That is why, legal advice matters before signing anything.

How Gordon Law Group, LLP Can Help

Gordon Law Group, LLP supports workers and business owners. Specifically, the firm reviews restrictive contracts. It explains future risks. It protects career rights. It also protects fair competition. Boston MA employment lawyer.

Final Reminder

Contact a lawyer before signing restrictions. Because, unclear contracts can damage careers. They can also limit business growth. Therefore, you should act early. You should ask questions early. You should protect your future early.

noncompete - Gordon Law Group, LLP