United States: How To Comply With Massachusetts' New Restrictions On Employee Noncompetition Agreements

Last Updated: September 11 2018
Article by Amber Shubin and Andrew R. Turnbull

On August 10, 2018, Massachusetts' Governor signed into law the Massachusetts Noncompetition Agreement Act (the "Act"), establishing strict new requirements for noncompetition agreements with employees entered on or after October 1, 2018. Although noncompetition agreements are still permitted for most employees, the Act requires employers to take a new approach to drafting, implementing, and enforcing those agreements.

Key highlights of the new law include:

  • Limiting the duration of post-employment noncompetition agreements to 12 months, although that period may be extended for up to 24 months in certain situations;
  • Requiring companies to provide "garden leave" payments during the post-employment noncompetition period equivalent to 50% of the former employee's base salary unless "other mutually agreed upon consideration" is provided;
  • Prohibiting noncompetition agreements for certain categories of employees as well as any employees who are terminated without cause or laid off;
  • Imposing these requirements on noncompetition agreements with independent contractors;
  • Mandating certain drafting and procedural requirements; and
  • Requiring all actions to enforce noncompetition agreements be filed in the employee's county or in Suffolk County's Business Litigation Session.

The significant restrictions and limitations of the Act, however, do not apply to:

  • Noncompetition agreements executed before October 1, 2018;
  • Noncompetition agreements entered in connection with the sale of a business or substantially all of its operating assets, "or otherwise disposing of the ownership interest" of a business, division, or subsidiary, for "significant" owners who will receive "significant" consideration or benefit from the sale or disposal;
  • Noncompetition agreements entered upon separation of employment, as long as the employee receives 7 business days to revoke acceptance of the agreement;
  • Nonsolicitation agreements (both employee and customer); and
  • Nondisclosure agreements.

Scope and Duration

The Act codifies existing case law that a noncompetition agreement "must be no broader than necessary" to protect an employer's legitimate business interests, which the Act defines as the employer's trade secrets, confidential information, or goodwill. Noncompetition restrictions are presumed reasonable where: (1) they are limited to "only the specific types of services provided by the employee at any time during the last 2 years of employment"; or (2) they are "limited to only the geographic areas in which the employee, during any time within the last 2 years of employment, provided services or had a material presence or influence."

The new law prohibits any noncompetition agreements that exceed 12 months post-employment. The 12-month duration can be extended for up to 2 years post-employment if the employee "has breached his or her fiduciary duty to the employer" or taken "property belonging to the employer."


The Act provides two methods for employers to show the consideration necessary to enforce noncompetition agreements. First, an employer can include a garden leave clause where it agrees to pay ex-employees during the time that he or she is restricted from competing. Employers opting for garden leave must pay employees "on a pro-rata basis during the entirety of the restricted period, of at least 50 percent of the employee's highest annualized base salary paid by the employer within the 2 years preceding the employee's termination." Employers can halt payments if the restricted employee breaches the agreement or unlawfully takes the employer's property. Second, employers can provide other "mutually agreed upon consideration" that is specified in the noncompetition agreement. Because the Act is silent as to what constitutes satisfactory "mutually agreed upon consideration," it is unclear whether an initial offer of employment is adequate consideration to support enforcement of a noncompetition agreement entered at the start of employment or if monetary payments, such as signing bonuses, or other forms of consideration are necessary.

The Act also changes Massachusetts precedent by making continued employment insufficient consideration to enforce a noncompetition agreement. Instead, those agreements must be supported by "fair and reasonable consideration" other than continuation of employment. Although it is clear that the consideration must be more than de minimis, what constitutes "fair and reasonable consideration" is undefined.

Applicability to Certain Employees and Independent Contractors

For the first time, the new law precludes employers from entering noncompetition agreements with the following categories of employees:

  • Employees who are classified as non-exempt from the Fair Labor Standards Act;
  • Undergraduate or graduate employees working as interns or another category of short-term employment;
  • Employees aged 18 years or younger; and
  • Employees that have been terminated without cause or laid off.

The Act, however, applies to noncompetition agreements with independent contractors.

Drafting and Procedural Requirements

The Act imposes the following drafting and procedural requirements for noncompetition agreements:

  • Must be in writing and signed by both the employee and the employer;
  • Expressly state that the employee has the right to consult counsel before entering into the noncompetition agreement;
  • Agreements entered into at the start of employment must be provided to the employee "by the earlier of a formal offer of employment or 10 business days before the commencement of the employee's employment"; and
  • Agreements entered into after employment has already begun must be provided at least 10 business days before they are set to go into effect.

Choice of Law and Forum Selection

Employers cannot try to avoid the Act's requirements by selecting the law of another jurisdiction in the noncompetition agreement. The Act voids any choice of law provision that assigns jurisdiction outside of Massachusetts for employees that are residents of or have been employed by their employer in Massachusetts for at least 30 days immediately prior to the end of their employment. Additionally, the Act requires all civil actions to enforce covered noncompetition agreements be brought in the employee's county of residence or, if mutually agreed upon, in the Suffolk County Business Litigation Session of the superior court. This requirement is especially important for employers headquartered outside of Massachusetts but employing people within the state.

Blue Penciling and Severability

Massachusetts courts will continue to have discretion to blue pencil, or modify, noncompliant or overbroad noncompetition agreements to render them enforceable to the extent necessary to protect the employer's legitimate business interests under Massachusetts law. The Act also clarifies that a judicial determination that a noncompetition provision in a contract is unenforceable has no impact on the remaining provisions of that agreement.

Practical Steps for Compliance

Although the Act largely codifies existing Massachusetts common law standards, it creates new restrictions and procedures on noncompetition agreements that employers will need to consider. With less than a month before the Act goes into effect, employers should consider taking the following steps:

  • Overhaul Noncompetition Agreements: New noncompetition agreements entered with Massachusetts employees should be drafted to comply with the Act. For example, employers will need to ensure that those agreements expressly state that the employee has a right to consult with counsel before executing the agreement, specifically identify the consideration supporting the agreement, and include a Massachusetts choice of law provision. In addition, despite some Massachusetts courts previously enforcing post-employment noncompetition periods of 2 years and sometimes longer, the new law effectively requires employers to reduce the duration of all post-employment noncompetition restrictions to 12 months, even for C-Suite executives. Employers who have all employees sign form noncompetition agreements will now have to strategically think about which employees should sign those agreements given the prohibition on noncompetition agreements for certain categories of employees. Although the Act does not apply to noncompetition agreements entered before October 1, 2018, employers should also consider having employees with preexisting noncompetition agreements enter new agreements. Noncompetition agreements that comply with the Act might provide employers with more predictability of enforcement as the Act largely follows current Massachusetts common law. Employers, however, will need to carefully consider whether new agreements make sense for all employees, particularly for key employees with preexisting agreements.
  • Update Processes for Entering Noncompetition Agreements: Employers should review their processes for entering noncompetition agreements with employees. Hiring processes and documentation must be updated to ensure that noncompetition agreements are properly executed at the beginning of employment. In addition, employers might also rethink the timing of employees' executing noncompetition agreements. For example, the Act does not apply to noncompetition agreements entered in connection with the termination of employment, but would require "fair and reasonable" consideration and a ten business day notice period for noncompetition agreements entered during employment.
  • Continue to Monitor Open Issues under the Act: There are a number of open issues under the Act that employers should continue to monitor. For example, what constitutes mutually agreed upon consideration, how "cause" will be interpreted, whether partners in limited partnerships or members of limited liability corporations would be considered "employees" under the Act, and the scope of the sale-of-business exception are all uncertain. It is also unclear whether Massachusetts can legally apply the Act to an out-of-state employer with limited contacts with Massachusetts merely because it employs a Massachusetts resident.
  • Evaluate Company-Wide Strategy In Light of Laws Limiting Noncompetition Agreements:  Companies with operations in multiple jurisdictions will need to consider their strategies for noncompetition agreements given the recent trend of enacted or proposed state laws limiting the use of noncompetition agreements. Massachusetts is just one of many states, including Illinois, Colorado, and Nevada, that have recently passed laws restricting the ability of employers to use noncompetition agreements. Some states, such as Pennsylvania, are currently considering banning noncompetition agreements altogether. Employers who operate in multiple states will need to consider how to navigate the different (and sometimes conflicting) state laws.

We will continue to monitor developments related to the Act and similar laws and will provide updates as needed.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
McLane Middleton, Professional Association
Ogletree, Deakins, Nash, Smoak & Stewart
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
McLane Middleton, Professional Association
Ogletree, Deakins, Nash, Smoak & Stewart
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions