Category Archives: Noncompetes

FTC Proposes Rule Eliminating Non-Compete Agreements Nationwide

Key Takeaways:

  • The proposed rule bans non-compete agreements nationwide for virtually all workers.
  • Employers would be required to rescind all current non-compete agreements they have with workers.


On January 5, 2023, the Federal Trade Commission (“FTC”) proposed a new rule banning non-compete agreements. The 218-page notice of proposed rulemaking details the FTC’s position on the value (or lack thereof) of non-competes,… More

First Circuit Affirms Injunction Enforcing Non-Solicitation Agreement Against Sales Director, Applies Delaware Choice Of Law Provision Against Massachusetts Resident

Last week, the First Circuit affirmed a preliminary injunction enforcing a one-year non-solicitation agreement against the Massachusetts-based former sales director of a California-based health care company that develops products to treat spinal disease. The sales director resigned from his position with the health care company to found and work for an exclusive distributor for the health care company. A few months later, the sales director dissolved his new company,… More

Federal Court Cites Enforcement Of Customer Non-Solicit Provision To Deny Enforcement Of Non-Compete Provision

Last week U.S. District Judge Zobel denied a road assistance service provider’s motion to stop its former vice president of sales from working for a competitor, citing the employer’s enforceable customer non-solicitation and confidentiality provisions as a reason not to enforce a broad non-compete provision.  The ruling on the preliminary injunction motion in Agero Administrative Service Corp. v. Campolo allowed the former employee to work for the competitor but prohibited him from soliciting certain customers of his former employer.… More

California Appellate Court Refuses to Enforce Employee Non-Solicitation Provision

In a decision that could affect Massachusetts companies with employees in California, a California appellate court voided a non-solicitation clause in former employees’ agreements.

It is well known that under California law, post-employment non-competition agreements are unenforceable, except in very limited circumstances. California courts have been slightly more forgiving of non-solicitation provisions, both as to employees and customers.  Employee non-solicitation provisions occasionally have been upheld when tested against a reasonableness standard.… More

A New Era of MA Noncompete Law Begins on Oct. 1

As previously reported, the new Massachusetts law governing non-competition agreements takes effect on Monday, October 1.  A comprehensive summary of the law is here.  The most significant takeaways are the following:

  • The law applies to post-employment noncompetes entered into on or after October 1, 2018 by Massachusetts workers and residents.
  • The law does not apply to other kinds of restrictions, including non-solicitation agreements. …
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SJC Refuses to Enforce Massachusetts Non-Compete on California Employee

On September 7, 2018, the Massachusetts Supreme Judicial Court refused to enforce a non-competition and non-solicitation agreement between a Massachusetts company and its California-based former employee who joined the employer’s competitor in California. The SJC reached this decision, in Oxford Global Resources v. Hernandez, even though the agreement was expressly governed by Massachusetts law and designated Massachusetts as the forum for all disputes concerning the agreement.… More

Watch – The New Massachusetts Noncompete Law: What You Need to Know

After years of debate, the Massachusetts Legislature recently passed a comprehensive noncompete reform law, and Governor Baker signed the bill on August 10, 2018. The new law overhauls existing law and imposes new prohibitions and requirements for noncompetes signed by Massachusetts workers as of October 1, 2018. Every Massachusetts employer that uses noncompetes will need to change its agreements and practices.

Partners Jonathan Keselenko and Michael Rosen present a webinar discussing what employers need to know about the new law to ensure compliance.… More

Governor Baker Signs Noncompete Bill

As expected, yesterday (August 10, 2018) Governor Baker signed the new Massachusetts noncompete bill into law.   A summary of the law is here.  Although some industry groups were urging the governor to reject the bill or send it back to the legislature to correct flaws and ambiguities, he signed it without changes.

The law takes effect on October 1 and will apply to non-competition agreements entered into on and after that date. … More

MA Legislative Session Ends Without Noncompete Compromise

The Massachusetts legislature ended its 2015-16 session last night without reaching a compromise on a bill to significantly reform the law of non-competition agreements in the Commonwealth. Negotiations continued late into the waning hours of the session, but legislators could not resolve the significant differences between the competing reform visions represented by the House and Senate bills.  Early reports indicate that the final disagreement was focused on the garden leave requirement,… More

MA Senate Passes Stringent Noncompete Bill

As expected, the Massachusetts Senate last night passed comprehensive legislation on non-competition agreements that imposes significantly more stringent requirements and limitations on noncompetes than is present in the legislation passed by the House two weeks ago (which already would significantly alter current law).  The bill passed by the full Senate differs only slightly from the the proposal advanced by the Rules Committee earlier this week and described in this post.  … More

Noncompete Reform Finally May Be Coming to Massachusetts

2000px-Seal_of_the_House_of_Representatives_of_Massachusetts.svg_-300x300After falling off the radar recently, it appears that non-compete reform is back on the agenda on Beacon Hill.  As reported by the Boston Globe, in a March 2, 2016 speech to the Greater Boston Chamber of Commerce, House Speaker Robert A. DeLeo voiced support for placing restrictions on non-competition agreements.  Among the measures advanced by DeLeo were: (1) limiting the duration of non-competes to 1 year;… More

California Case Highlights Need to Look Before You Leap . . . and File Suit

Late last month, the California Court of Appeal upheld a $180,000 award of sanctions against an employer for bringing a baseless trade secret misappropriation suit. While this case arose in California and involved California law, it involves concepts that have been recognized by Massachusetts judges and shows the possible consequences of the common impulse to file a lawsuit quickly and ask questions later.

In the California case, Cypress Semiconductor Corp.… More

Former Employer Bounced From Court – Forced to Arbitrate Noncompete Claims

A recent decision from Judge Kaplan in the MA Business Litigation Session highlights some interesting issues that arise when a noncompete case is complicated by the existence of an agreement to arbitrate claims. In Tibco Software, Inc. v. Zephyr Health, Inc. and Kevin Willoe,  Kaplan required a plaintiff seeking to enforce restrictive covenants to arbitrate – rather than litigate in court – claims against both the former employee and his new employer.… More

CFAA and Noncompete News

            Over the past two months, several interesting items of Computer Fraud and Abuse Act (CFAA) and noncompete news have crossed my desk.  Below are summaries of the two most important items:

            1. Encryption Can Be a CFAA Violation: In early December, Judge Denise J. Casper of the U.S. District Court in Massachusetts ordered a former employee of a company to, among other things, disclose the password that he put on an important file on the company’s server because the company was likely to prevail on its CFAA claim against the employee under the “preliminary injunction”… More

What an Agreement Says Really Matters

            Earlier this month, Judge Dennis J. Curran of the Massachusetts Superior Court decided that a noncompete clause in an employment agreement that had, by its terms, expired after the employee turned 65 could not be enforced even though the employee continued to work for the employer before moving to another company.  The agreement explicitly stated that it terminated when the employee turned 65, and the noncompete clause in it stated that the employee could not compete with the employer within a 50 mile radius of the employer for two-and-a-half years “after the final termination of this Agreement.” … More

Update on Noncompete Legislation in Massachusetts

Earlier this month, the Joint Committee on Labor and Workforce Development of the Massachusetts state legislature held a hearing during which it discussed a proposal to limit the enforcement of noncompetes.  The bill, in both its House and Senate versions, provides, with certain exceptions relating to acts by the employee, a presumption that noncompetes for no longer than six months are reasonable (and enforceable), but noncompetes that are longer than six months are presumed to be unreasonable (and not enforceable to the extent they last longer than six months). … More

Litigation Over Noncompete Clauses Is Rising

            A Wall Street Journal article published yesterday states that litigation over employee noncompetes has risen by more than 60% in the past decade, and this increase is affecting entrepreneurs who are unable to leave their current jobs to start new businesses or hire employees.  This generally is the argument in favor of reform legislation, such as what has been proposed in Massachusetts, to limit or even eliminate noncompetes,… More

Employees Barred from Bringing Claims After a Noncompete Trial

            Massachusetts Lawyers Weekly reported last month on a Massachusetts federal court decision that barred former employees from suing their former employer for unpaid overtime, commissions, and bonuses after a trial over the employees’ noncompete agreements because the claims either should have been brought against the employer in the first lawsuit or were litigated as defenses at the trial.  I offer some analysis in the article, and would only add that the procedural doctrines of collateral estoppel and compulsory counterclaims that the judge relied on are not new,… More

U.S. District Judge in Massachusetts Declines to Enforce Noncompetes Because the Jobs of Two Employees “Materially Changed”

            If an employee signs a noncompete, non-solicitation, or non-disclosure agreement with his employer, and then gets promoted, makes more money, and has more responsibilities, is the agreement still enforceable?  At least one Massachusetts judge says no.  See Rent-a-PC, Inc. v. March, C.A. No. 13-10978-GAO (D. Mass. May 28, 2013). 

            In the Rent-a-PC case, the plaintiff Rent-a-PC, a company that provides short-term rentals of electronic equipment,… More

New Massachusetts Superior Court Noncompete Decision Discusses the “Material Change” Defense and Shows the Benefit to Employers of Having a “Material Change” Clause in Noncompete Agreements

            Last month, Judge Edward P. Leibensperger of the Massachusetts Superior Court in Middlesex County decided a case in which he issued a preliminary injunction to enforce a non-competition and non-solicitation agreement and rejected several defenses offered by the defendant employee, including that the employee’s employment had “materially changed” to void the agreement.  Although Judge Leibensperger discusses many interesting issues in the decision, including whether the employer’s president had orally agreed not to enforce the agreement,… More

Always Be the Good Guy

Yesterday, I went to a continuing legal education class sponsored by the Boston Bar Association titled “Traps for the Unwary: Drafting Non-Competes and Other Post-Employment Restrictions.”  The class focused on drafting agreements, but naturally there was a lot of discussion about enforcing them as well.  Among the many useful things I learned is that, in noncompete litigation, “you always want to be the good guy.”  Judge Janet Sanders of the Massachusetts Superior Court Business Litigation Session said that noncompete cases (and similar cases dealing with non-solicitation provisions) are so fact-intensive that judges can often be outcome determinative in their decision-making,… More

10 Important Pieces of Noncompete, Trade Secret, and Computer Fraud News

During this past fall and much of the winter, I was serving as a Special Assistant District Attorney in Norfolk County, Massachusetts, which didn’t give me much time to blog. So, to steal a technique that John Marsh uses every week to supplement his excellent posts on the Trade Secret Litigator blog, here are some short discussions of interesting cases and articles I came across over the past few months.… More

Why Boston College Can’t Hire Back Its Former Football Coach

Anyone who knows me well knows that I love college football.  I went to Boston College Law School and am a BC Eagles season ticket holder.  So I am interested in BC’s search for a new head football coach after the school’s decision to fire Frank Spaziani after a 2-10 season this year, including whether the school could hire former BC head coach Tom O’Brien back to the school after he left BC to coach the North Carolina State Wolfpack in 2006 (O’Brien was fired by NC State last month).… More

New Noncompete Case from the District of Massachusetts Highlights What an Employee Should Not Do to Defeat a Noncompete

Late last month, Judge Patti Saris of the U.S. District Court for the District of Massachusetts ruled that a noncompete was enforceable and ordered the defendant employee not to work for a competitor of the plaintiff employer for one year.  In addition to determining that the noncompete was valid, Judge Saris concluded, among other things, that the employer would likely suffer “irreparable harm,” an injury that cannot adequately be compensated by money damages,… More

How to Protect Your Personal Device (and Personal Information) from Discovery

Once a lawsuit over trade secrets or a noncompete begins, “discovery” is usually the next step in the case.  This is the phase of a lawsuit where each party asks for documents and conducts depositions to obtain relevant information from the other side.  As any employment litigator can tell you, discovery usually involves tricky issues regarding what information is relevant to the lawsuit (and thus should be disclosed) and what is the personal information of an employee or other person that has little to do with the case.… More

The Drawback of Choice-of-Law Clauses for Employers

A choice-of-law clause is a provision in a contract (e.g., a noncompete) that states what state’s law will apply to the contract, regardless of where the lawsuit to enforce it is filed.  Donald C. Dowling Jr. recently published an article that explains the drawback of such provisions for employers.  Although he focuses mostly on international law, his observations apply with equal force to U.S. law.  He writes that “[l]aws that enforce restrictive covenants [i.e.,… More

Dentists and Noncompetes

The Boston Business Litigation newsletter from Yurko, Salvesen & Remz recently brought to our attention an interesting new lawsuit involving a claim by a dental practice that a dentist violated non-competition and non-solicitation covenants he entered into when he sold his practice.  The noncompete restriction at issue prohibited the dentist from “practicing dentistry” for three years within a 15 mile radius of the plaintiff’s South Weymouth office. So far,… More

Can Lawyers Sign Noncompetes?

As reported by Law360, a Philadelphia-based law firm, Swartz Campbell LLC, recently sued a competing Philadelphia firm, The Chartwell Law Offices LLP, alleging that Chartwell essentially stole one of Swartz’s offices located in Fort Myers, Florida, including a partner and two employees.  Swartz contends that the partner is subject to a partnership agreement that requires a four-month notice before he can leave the firm, but the partner provided notice and left Swartz in July. … More

Suffolk Superior Court Rules Massachusetts General Hospital IP Policy is Enforceable Against a Urologist Who Created an Invention for Voice Training on His Own Time and at His Own Expense

Often an employer will require an employee to sign an invention assignment agreement before starting to work for the employer, which frequently states that any inventions that an employee creates while working for the employer shall become the employer’s property.  Last month, such an agreement was put to the test and survived.  Judge Peter Lauriat of the Suffolk County Superior Court Business Litigation Session ruled that an IP Policy agreement between a staff physician and Massachusetts General Hospital (MGH) was enforceable and was not an unreasonable restraint on trade. … More

Fraudulent Inducement Argument Rejected in Federal Noncompete Case (and the “Inevitable Disclosure” Doctrine is Applied)

In a recent decision from the U.S. District Court for the District of Massachusetts, Judge Denise Casper rejected an argument by the defendant employee in a noncompete case that the employee was “fraudulently induced” by his former employer to sign a noncompete agreement.  The employee argued that the offer letter he received offering him stock options after he began working for the employer only stated that he would be required to sign an agreement with non-solicitation provisions in order to receive the stock options,… More

The Status of Noncompete Reform in Massachusetts

Yesterday, I attended a panel presentation at the Boston Bar Association on the status of noncompete legislative reform in Massachusetts. As Michael Rosen has discussed in numerous prior posts on this blog, recently there has been a push to limit noncompetes in order to increase employee mobility and productivity, led by state Rep. Lori Ehrlich (D-Marblehead) and state Sen. William Brownsberger (D-Belmont). The presentation was designed to update the legal community on the movement.… More

“Employee Non-Compete Agreements, Trade Secrets and Job Creation: The Status of Law Reform” at the Boston Bar Association

On Tuesday, July 24, the Boston Bar Association will be hosting a symposium on noncompete and trade secret legislation in Massachusetts.  State Representatives Brownsberger and Ehrlich, the leaders of the movement to substantially limit the enforceability of noncompetes in Massachusetts, will be in attendance.  Mike and I plan to be there, too, and will report back.  Stay tuned. More

New U.S. District Court Decision from Massachusetts Makes “Inevitable Disclosure” Arguments Effective Only When Noncompetes are Involved

Massachusetts Lawyers Weekly reports on a new decision from the U.S. District Court for the District of Massachusetts by Judge Casper that makes “inevitable disclosure” arguments effective only in cases involving noncompetition agreements. I’m quoted in the text of the article.  (For those of you without a subscription to Massachusetts Lawyers Weekly, I’ll post a copy of the article once I receive reprint permission.) The article does a good job of describing the facts and holding,… More

“Full Time and Attention” Clauses

Chip Collins has written an interesting post on “full time and attention” clauses in employment contracts.  These clauses often state that an employee must devote his or her “full time and attention” to the employer’s business, i.e., the employee cannot engage in other work, including side businesses or preparing to compete with the employer, during the course of the employment.  Massachusetts employers might benefit from including these provisions in employment contracts in addition to non-compete,… More

“Preparing for Non-Compete Litigation”

I read an interesting article by Peter A Steinmeyer and Zach C. Jackson on the steps an employer should consider before filing a noncompete lawsuit.  It’s in a very useful format that lists bullet points under each item.  I found it particularly interesting that the authors noted that sending a copy of a “cease and desist” letter to the new employer can come with risks.  A “cease and desist”… More

New Case Emphasizes that the Lack of “Boilerplate” in a Noncompete Agreement Can Have Consequences

Many contracts, including noncompetition agreements, have what’s called “boilerplate” language, “ready-made or all-purpose language that will fit in a variety of documents.” Black’s Law Dictionary 72 (2d pocket ed. 2001). One type of boilerplate often contained in a noncompete is an assignability clause, which might say something like: “This Agreement is assignable by the Company and inures to the benefit of the Company, its subsidiaries, affiliated corporations, successors,… More

Noncompete Cases Sometimes Go to Trial

A plaintiff employer who files a lawsuit to enforce a noncompete often will seek a “preliminary injunction.” This is an order from the court at the outset of the case stating that the defendant employee cannot work for the competing employer while the litigation is pending. A typical reason a plaintiff asks for a preliminary injunction is that the employee’s presence at the competitor will cause “irreparable” harm to the plaintiff: the employee will disclose the plaintiff’s confidential information to the competitor. … More

Another MA Noncompete Decision Addresses the “Material Change” Defense

Yet another Massachusetts Superior Court judge has issued a decision addressing whether a change in an employee’s job precluded enforcement of a previously-signed noncompete. (See here and here for previous discussions of this issue.) In an order issued last March (but only recently made public by Massachusetts Lawyers Weekly (login required), Superior Court Judge E. Susan Garsh rejected the “material change” arguments made by the defendant sales employees and issued a preliminary injunction enforcing their non-competition restrictions. The judge’s order,… More

Can a Judge in a Divorce Proceeding Order a Spouse Not to Compete with the Other Spouse?

The answer, at least in Massachusetts, is yes. In Cesar v. Sundelin, the Massachusetts Appeals Court recently ruled that, in dividing a marital estate that includes a family business, a judge of the Probate and Family Court has the authority to enjoin the party that no longer will have any ownership in the business from operating a competing business. The Appeals Court reasoned that a business’s “good will” is part of the martial property subject to equitable distribution. … More

Hampden Superior Court Refuses to Enforce Non-Competition Agreement Because Asset-Purchase Agreement Breached

When a plaintiff tries to enforce a non-competition agreement, sometimes the defendant will argue that the non-compete should not be enforced because the plaintiff has breached another agreement between the parties. If true, this argument will often work to defeat a request for “equitable relief”—a plaintiff’s request for a preliminary injunction preventing the defendant from working for a competitor, for example—because “he who seeks equity must do equity.”

Ultimately,… More

Executives (and One Law Firm) Allegedly Behaving Badly

A number of cases involving former executives have received national attention recently and serve as a good reminder that trade-secret, non-solicitation, and non-competition controversies can arise at the highest level of a company. Another recent case also serves as a reminder that trade-secret claims should be filed only when there is a good-faith basis to do so. Consider the following:

  • In In re: High-Tech Employee Antitrust Litigation,…
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Will Massachusetts Adopt the Uniform Trade Secrets Act?

At my last Massachusetts Bar Association (MBA) Civil Litigation Section meeting, I learned about a bill to adopt the Uniform Trade Secrets Act (UTSA) that has been floating around the Massachusetts Legislature since late January. Forms of the UTSA have been adopted in 46 states in addition to the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Only New York, Texas, North Carolina, and Massachusetts have not adopted it.… More

Middlesex Superior Court Not Persuaded by Estoppel Argument in Non-Compete Case

A recent case decided in the Middlesex County Superior Court illustrates how not every claim of generalized “unfairness” will be sufficient to avoid enforcement of a non-competition agreement.

In A.R.S. Services, Inc. v. Baker, the defendant employee worked for A.R.S. Services, a company in the disaster restoration field, and had signed an agreement with non-competition and non-solicitation provisions, both enforceable for one year after he left the employ of A.R.S. Shortly after the employee had resigned from A.R.S.,… More

If the Terms of Employment Change, Employees May Need to Sign New Non-Competition Agreements

A case decided last month in the Massachusetts Superior Court Business Litigation Session shows once again how material changes in the conditions of an employee’s employment can void a previously signed restrictive covenant, especially when the employer gives the employee a new non-competition agreement but the employee never signs it.   

The lawsuit was brought by a software management consulting firm, Grace Hunt IT Solutions, LLC (“Grace Hunt”),… More

Noncompete Enforced Despite Hiring Company’s Best Efforts to Preserve Former Employer’s Secrets

This decision by a federal judge in Massachusetts enforcing a non-competition agreement is notable for at least two reasons: (1) it presents yet another example of a court in Massachusetts rejecting an argument that California law should govern a non-compete dispute, and (2) it contains an interesting discussion of the hiring company’s substantial but unsuccessful effort to avoid the noncompete by taking steps to ensure that the new employee protected the confidential information of his previous employer. … More

Noncompetes and Races to Courthouses

An increasingly common scenario in the world of noncompete enforcement is the so-called “race to the courthouse,” where parallel actions are brought in separate jurisdictions about the same dispute. In one case, the former employer seeks enforcement of the noncompete. In the other, the employee and his or her new employer seek an order declaring that the noncompete is unenforceable. Many of these situations involve California as the location of the new employer.… More

Georgia Turns Toward Greater Noncompete Enforcement

While this blog focuses on the continuing evolution of the law of non-competition agreements and related issues in Massachusetts, we occasionally look to notable cases and legislative developments in other states.  What happened in Georgia last week certainly can be described as notable.

Here in Massachusetts, we have spent the past three years debating whether to abolish or substantially limit the enforcement of noncompetes. The principal rationale for doing so would be to remove what is perceived as an inappropriate obstacle to labor mobility and,… More

Enforcement of Noncompete Undermined By Choice of Remedy

To the uninitiated, a standard non-disclosure, non-competition and non-solicitation agreement may seem like pages of meaningless legal “boilerplate” punctuated by a few interesting sentences containing the guts of the document: the restrictions themselves. A recent Massachusetts court decision illustrates that this approach to noncompetition agreements can be perilous. The case underscores the need for employers that utilize non-competition and non-solicitation agreements to give careful attention not just to the specific restrictions being imposed,… More

California Tech Giants Settle DOJ Anti-Poaching Case

As followers of the recent debate about noncompetes in Massachusetts are well aware, a significant impetus in the push for a change in Massachusetts law has been the contrast provided by California, where employee non-competition agreements generally are unenforceable.   As reported here when the MA debate started in earnest, proponents of efforts to prohibit noncompetes have argued that Silicon Valley has fared better than the Massachusetts tech sector in recent years at least in part because, in the absence of noncompete enforcement,… More

MA Noncompete Legislation is Dead … At Least for Now

The effort to substantially alter the landscape for noncompete agreements in Massachusetts via legislation has stalled. After advancing out of committee in the Massachusetts House of Representatives, the compromise legislation (described here) was included in an economic development bill with many other provisions and proposed amendments relating to business issues in the Commonwealth. As has been reported here on the Associated Industries of Massachusetts (AIM) blog,… More

Noncompete Legislation Takes a Step Toward Passage

As reported here on the website of Rep. William Brownsberger:

legislation to revise the law of non-competition agreements in Massachusetts took a step forward this week. The Committee on Labor and Human Resources reported out a bill with a favorable recommendation.  Here is the new draft.  It is essentially the bill that Representatives Ehrlich and Brownsberger worked out [with] representatives of many interest groups, but we have not yet had the opportunity to study the language carefully.… More

Battles that Decide Wars

It is often said that noncompete cases differ from other types of civil litigation in that the initial battle in the case often decides the war. If you slip and fall while buying groceries and decide to sue the supermarket, your case will follow the typical path of civil litigation: a complaint will be filed, commencing a lawsuit; the defendant will answer; the parties will spend months or even years gathering information in the discovery phase;… More

The Perils of Promotions: Your Noncompete May be in Jeopardy

Many employers require that new hires sign a non-competition or non-solicitation agreement as a condition of hire.  Companies expect that these agreements will be valid and enforceable when the employee leaves, even if the employee and his or her job evolve over time.  In 2004, this basic assumption was called into question as a result of three successive decisions by Massachusetts Superior Court judges which held that a noncompete signed at an employee’s hire may later become unenforceable due to changed circumstances in the employee’s job. … More

Upcoming Hearing and Revised Legislation

The next round in the ongoing debate about noncompetes in Massachusetts has arrived.  As described here, a public hearing on various forms of pending noncompete legislation will take place before the Joint Committee on Labor and Workforce Development on October 7, between 10:30 am and 1:00 pm.  The location is Room A-2 of the State House.  The public is invited to attend and testify.

Earlier this week,… More

Playing With Fire: Employers Waiving Noncompetes

In a recent post at Innovation Economy, Scott Kirsner describes a discussion he had with an attorney who has been involved with negotiating severance deals for several employees.  The attorney has sought to avoid future noncompete complications for his clients by essentially trading severance pay for noncompete relief.  The attorney told Kirsner that “employees can often get released from the non-competes by giving up about 25% of their severance payment.”  This may be a desirable outcome for departing executives,… More

Report: Employee Theft of Information is Pervasive

Multiple media outlets (see here  and here, for example) have been covering an alarming report jointly issued recently by the Ponemon Institute, an Arizona-based research group, and Symantec Corp., that data theft is common among departing employees. As reported in the Washington Post, the most significant finding of a joint survey of employees who left a job in 2008 was that almost 60% of ex-employees admitted to taking company data of one sort or another. The most commonly identified kinds of records taken were “email lists,”… More

Can a Noncompete be Unwritten?

It is possible — at least theoretically — to have a purely oral noncompete agreement.  A covenant not to compete is, most fundamentally, a contract, and a valid and legally enforceable contract can be formed through purely verbal communications (with some exceptions not relevant here). Nevertheless, given the heightened scrutiny that noncompetes are subjected to under Massachusetts law, any employer wishing to be able to enforce a non-competition restriction in court would want the agreement to be in writing.… More

Layoffs and Noncompetes

I recently authored an article on planning reductions-in-force, a topic unfortunately on the minds of many businesses in these difficult economic times. (The article is available here.)The last of my “tips” urges companies to remind employees affected by layoffs of the continued applicability of nondisclosure obligations and other restrictive covenants. This raises a question: will a noncompete or other restrictive covenant be enforceable against employees who are let go as part of a layoff? As is often the case in this area,… More

Federal or State Court: Which is Better for Noncompetes?

Many litigators of non-competition agreement cases in Massachusetts would reflexively answer “state court” to the above question. That is, given the choice (if jurisdictional principles permit) of bringing an action to enforce a non-compete or non-solicitation provision in state or federal court in Massachusetts, the conventional wisdom would be to avoid what has been perceived as the more exacting scrutiny of the judges in the U.S. District Court in Boston.

But some recent trends might suggest otherwise.… More

Massachusetts Legislature Adds to Short List of Prohibited Non-competes

I would not be the first to observe that the Massachusetts legislature sometimes acts in strange and mysterious ways. It has been known to surprise even those of us who think we are paying attention to such things with unexpected employment-related legislation. The very significant amendment in 2004 to the Massachusetts Independent Contractor Law (.pdf) is a good example of this phenomenon: although it has wide-ranging application and has vexed employment lawyers and the business community since its passage,… More

Choice of Massachusetts Law Dooms Successor’s Attempt to Enforce Noncompete

Whether a successor in a corporate transaction may enforce a noncompete between the predecessor entity and its employees remains one of the more undeveloped and uncertain areas of noncompete law in Massachusetts. A few years ago, in Securitas Security Services USA, Inc. v. Jenkins, now-retired Judge Allan van Gestel of the Suffolk County Business Litigation Session issued a significant decision in this area – albeit at the trial court level –… More

Two Judges to Bear Stearns: No Injunction to Enforce “Garden Leave” Provisions

It is not uncommon for employment agreements, particularly those involving senior employees, to contain provisions requiring that the employee give notice of his or her intention to leave. These “mandatory notice” provisions can have a duration of as little as two weeks and as much as six months. Employers explain them as being intended to minimize the disruption to operations (and customers) caused by the abrupt departure of a valued employee.… More

Non-Compete Related Counterclaim Slapped Down By Massachusetts Anti-SLAPP Law

A recent decision illustrates the risks for defendants in non-compete cases who go on the offensive by asserting counterclaims against former employers. In a 2006 opinion, the Massachusetts Business Litigation Session awarded a defendant in a non-compete case significant damages after the defendant proved that the plaintiff had filed the lawsuit for improper competitive purposes. Yet, in a recent decision, the same court dismissed a defendant’s counterclaim, ruling that the counterclaim was based solely on the plaintiff’s filing of the lawsuit and that the plaintiff’s claims were reasonably based in the facts and the law.… More

Howie Carr Redux: Judge Says Carr Still Can’t Jump to Another Radio Station

This week’s ruling in the ongoing Howie Carr saga, despite the current media splash, essentially maintains the status quo in the case. At issue was Carr’s emergency motion for reconsideration of an earlier order — described here — refusing to invalidate the exercise by Carr’s long-time employer — Entercom — of a right of first refusal. The effect of that ruling was to continue Carr’s employment with an employer he wishes to leave and to place him at risk of significant damages if he refuses to return to his job and/or tries to take another job.… More

Massachusetts Judge: “Goliath” Can’t Enforce Nonsolicit Against “David”

While it remains quite difficult to predict whether a Massachusetts judge will enforce any given restrictive covenant in a particular case, close observers of recent Massachusetts noncompete decisions would note that judges increasingly are reluctant to enforce post-employment restrictions against "the little guy" — as contrasted with senior, highly-compensated managers.  A recent insurance-industry dispute exemplifies this trend.  In Banc of America Corporate Insurance Agency, LLC v. Verille,… More

Why Can’t Howie Carr Change Employers? Thoughts on the Decision

Under a little known and rarely interpreted Massachusetts statute, non-competition agreements in the broadcasting industry are void and unenforceable. So, how could Entercom Boston, the employer of well-known radio personality Howie Carr, keep him from going to work for a competing radio station?

As Massachusetts-based readers of this blog likely are aware, last week Judge Allan van Gestel, a well-respected judge in the Suffolk County Business Litigation Session,… More

Massachusetts Judge Nixes Financial Services Noncompete

Employers in Massachusetts generally can take comfort in a well-established legal principle that gives judges discretion to enforce a noncompete provision “to the extent that it is reasonable.”  Courts regularly use this concept to modify the duration and/or scope (substantive and geographic) of noncompete provisions to make them “reasonable” based on the particular facts of a case. 

A recent Massachusetts Superior Court decision reminds employers that this concept has its limits. … More

Massachusetts Judge Uses Strong Words for Enforcing Noncompete

The current trend in the world of noncompete litigation in Massachusetts is away from the enforcement of traditional noncompetes — as distinguished from non-solicitation and non-disclosure provisions.  Massachusetts judges seem to be increasingly skeptical of traditional noncompete provisions in contexts other than very senior, highly-paid employees going to work for direct competitors.  So, when a decision like Eastern Bag & Paper Co., Inc. v. Ross, is issued,… More

Mazonson, Part II: Judge Finds Customer-based Noncompete Overbroad

The Mazonson decision described in the previous post also contained an interesting discussion of the plaintiff’s request to enforce a customer-based restriction against one of the individual defendants.  On this issue as well, the Massachusetts court denied the request for a preliminary injunction.  Interestingly, Judge Murtagh found that the agreement’s restriction prohibiting the employee from providing services or selling insurance to any customer, even if there had been no solicitation by the employee,… More