Worried about being shackled to your former employer because of a restrictive noncompete agreement? Good news for you: Massachusetts just launched a new law covering all new MA employee noncompete agreements signed after October 1, 2018, and it significantly eases the burden on employees.
If you’re like most employees, you got a new hire packet from your most recent employer, glanced through it quickly, and signed and returned whatever documents were inside ASAP before they had a chance to change their mind about hiring you. Little did you know that inside that innocent-looking packet was lurking a horrible bargain: In exchange for the company hiring and paying you, you signed a document (noncompete agreement) that promised you would not work for “a competitor” (defined very loosely by the employer) for up to two years after leaving your job.
Then, months or years later when it’s time to go and you’ve accepted a great job offer, the HR team informs you that they’ll be pursuing legal action against you for violation of that agreement, and you can’t take the new job after all. Why? It turns out that the offer you took was with “a competitor” (loosely defined by them until now) and, sadly, they had the power to keep you from taking it. Thank goodness, that power has been significantly curtailed by this new law passed in August 2018.
What the new law for MA employee noncompete agreements gives job seekers
Job seekers have been clamoring for relief from this scenario for many years, and Massachusetts just took action to loosen the grip that employers have on their departing employees. As of October 1, 2018, the law states that any employer with employees in MA (even out-of-state employers) need to change their noncompetes to meet these new rules. Some of the new conditions include:
- It doesn’t apply to you if you’re fired without cause or laid off
- Certain workers (in some health professions, journalism and the law) can’t have a noncompete at all
- If a noncompete exists, it must be in writing and signed by both parties
- It must state that the employee has the right to legal counsel before signing
- It must be given to the employee within certain time frames
- It must be limited to no more than one year and limited by geography
- It can only restrict you from activities you’ve performed in the past 2 years
- It can’t cover non-exempt employees, only exempt employees as defined by the Fair Labor Standards Act
- The employee who is restricted from working must be paid by the employer (“garden leave”) of at least 50% of the employee’s highest pay over the past 2 years, or other reasonable compensation
What the new law doesn’t restrict
Employers are still free to hold past employees to non-solicitation clauses (where you agree not to try to hire away your former colleagues), nondisclosure/confidentiality agreements, invention clauses that govern intellectual property, and a client non-solicitation restriction.
No one yet knows exactly how this law will play out in reality, since employers are scrambling to interpret it for themselves. One thing is clear, however: if you’re looking for a new job, you may want to wait until October 1st to start it, if you’re worried about future restrictions to your employment.