Employers in Massachusetts are watching closely as a non-compete bill was recently passed by the Legislature and is now on Governor Baker’s desk. Currently slated to take effect on October 1, 2018, the law will significantly impact the drafting, implementation and enforcement of non-compete agreements in the Commonwealth. Governor Baker is expected to sign the bill into law, but before doing so, he may amend and send the bill back to the Legislature to be voted on again.
The legislation imposes several key restrictions on employers using non-compete agreements in Massachusetts, including:
- limiting the post-employment non-compete restriction period to a maximum of one year;
- requiring employers to offer a “garden leave” for the length of the restricted period providing for at least 50% of the employee’s highest base salary during the prior two years (or some “other mutually-agreed upon consideration”);
- prohibiting employers from enforcing non-compete agreements against certain categories of workers, including non-exempt employees and employees who have been laid off or whose employment was terminated without “cause” (currently an undefined term); and
- no longer allowing continued employment to serve as consideration to support non-competition agreements signed after employment has commenced.
Once signed into law, we will provide a full breakdown of the law’s key provisions and an overview of the law’s practical implications for employers with Massachusetts employees and independent contractors. Stay tuned!