Massachusetts Noncompete Agreement Restrictions

Massachusetts Noncompete Reform

The Massachusetts Noncompetition Agreement Act (MNAA), effective October 1, 2018, significantly reformed the enforceability of noncompete agreements in the Commonwealth. The law applies to noncompete agreements entered into on or after the effective date and imposes substantive and procedural requirements that employers must follow.

The MNAA does not ban noncompetes but establishes strict conditions that make them more difficult to implement and enforce. Employers accustomed to broad noncompete agreements must restructure their approach to comply with the law.

Key Requirements for Enforceability

To be enforceable under the MNAA, a noncompete agreement must be in writing and signed by both the employer and employee. It must be supported by a garden leave clause or other mutually agreed-upon consideration. Garden leave requires the employer to pay the employee at least 50 percent of their highest annualized base salary during the restricted period.

The agreement must be provided to the employee before a formal offer of employment is made or, if entered into during employment, at least 10 business days before the effective date. The agreement must also be accompanied by a notice advising the employee to consult with an attorney before signing.

Duration and Scope Limitations

Noncompete agreements may not exceed 12 months in duration unless the employee has breached a fiduciary duty or has taken the employer's property, in which case the duration may extend to 24 months. The geographic scope must be reasonable and limited to the areas where the employee provided services or had a material presence during the last two years of employment.

The agreement must be reasonable in scope and necessary to protect legitimate business interests, which the law defines as trade secrets, confidential information, or the employer's goodwill.

Exempted Workers

The MNAA prohibits noncompete agreements for several categories of workers. These include non-exempt employees under the FLSA, undergraduate or graduate students in internship or short-term employment, employees who have been terminated without cause or laid off, and employees under 18 years of age.

Additionally, the law does not apply to non-solicitation agreements, non-disclosure agreements, non-competition provisions made in connection with the sale of a business, or agreements related to the cessation of or retirement from employment if the employee is given at least seven days to rescind the agreement.

Practical Guidance for Employers

Massachusetts employers should review all existing noncompete templates and update them to comply with the MNAA's requirements, particularly the garden leave provision and timing requirements. Employers should evaluate whether non-solicitation or NDA agreements might achieve their business objectives without the costs and restrictions associated with noncompetes. When noncompetes are necessary, they should be narrowly tailored to the employee's specific role and the employer's legitimate interests to maximize enforceability.