Employee Noncompetition Laws and Practices: A Massachusetts Paradigm Shift Goes National

Abstract

After 10 years of legislative gestation, the Great and General Court passed, and Governor Charlie Baker signed, the Massachusetts Noncompetition Agreement Act (“MNAA” or “Act”), G.L. c. 149, § 24L added by St. 2018, c. 228, § 21, effective prospectively only (§ 71) for agreements entered into on or after Oct. 1, 2018. The Act dramatically reduces the number of Massachusetts employees who can be subjected to an enforceable noncompetition agreement, and even when such agreements are permitted, employees are afforded stronger substantive and procedural protections than in the past, while employers are limited to substantially reduced post-employment restrictions. The Act represents a paradigm shift in favor of employees, particularly hourly workers, but employers retain many options and may benefit from a perhaps greater clarity and certainty in drafting valid and enforceable noncompetition agreements.

The common law will continue to have vitality, however, because the legislature chose to address only employee noncompetition agreements, and even as to those agreements, it left many related restrictions in place and codified aspects of the common law that will continue to require case-by-case exposition. Thus, an understanding of the common law background assumed to continue to govern unless changed by the Act (or later amendments), is necessary to a full understanding of the Act.

In the midst of this legal turmoil, and in discussing a statute for which the interpretive process of court decisions has barely begun, the authors necessarily venture few definitive conclusions about the MNAA. Instead, we attempt to describe the Act’s most important features and focus on some questions that remain to be resolved, in the belief that at this stage of the legal process most practitioners are attempting to do the same in order to guide and protect their employer and employee clients.