Employee Non-Compete Agreement (Massachusetts): Free template
Employee Non-Compete Agreement (Massachusetts)
An Employee Non-Compete Agreement is a legal contract between an employer and an employee that restricts the employee’s ability to engage in competitive activities, such as working for a competitor or starting a competing business, during and after their employment. This agreement protects the employer’s confidential information, trade secrets, customer relationships, and other proprietary interests. In Massachusetts, non-compete agreements are enforceable under the Massachusetts Noncompetition Agreement Act (M.G.L. c. 149, § 24L), which imposes strict requirements to ensure fairness to employees.
For example, a financial services firm in Boston might require its advisors to sign a non-compete agreement to prevent them from soliciting clients or joining competitors after leaving the company.
Tips for drafting and maintaining an Employee Non-Compete Agreement in Massachusetts
- Identify the parties: Clearly specify the names, contact information, and roles of both the Employer and the Employee.
- Example: “This Employee Non-Compete Agreement (the ‘Agreement’) is entered into by [Employer Name], located at [Address], and [Employee Name], residing at [Address].”
- Define the purpose of the agreement: Explain the legitimate business interests being protected, such as trade secrets, confidential information, or customer relationships.
- Example: “The purpose of this Agreement is to protect the Employer’s legitimate business interests, including but not limited to confidential information, trade secrets, and customer goodwill.”
- Specify the scope of restrictions: Clearly outline the activities the Employee is restricted from engaging in, such as working for competitors or soliciting clients.
- Example: “During the term of employment and for a period of [X] months/years thereafter, the Employee shall not engage in any business or activity that directly competes with the Employer’s business within [Geographic Area].”
- Limit the duration: Ensure the time restriction is reasonable and aligns with Massachusetts law, which generally limits non-compete agreements to one year after employment ends.
- Example: “The restrictions outlined in this Agreement shall remain in effect for a period of [X] months following the termination of the Employee’s employment.”
- Define the geographic scope: Specify the geographic area where the Employee is restricted from competing, ensuring it is reasonable and necessary to protect the Employer’s interests.
- Example: “The restrictions in this Agreement apply to the following geographic area: [City, County, State, or Region].”
- Include confidentiality provisions: Protect sensitive information by requiring the Employee to maintain confidentiality during and after employment.
- Example: “The Employee agrees not to disclose, use, or exploit any confidential information obtained during their employment for personal gain or the benefit of any third party.”
- Address remedies for breach: Specify the consequences if the Employee violates the agreement, such as injunctive relief or monetary damages.
- Example: “In the event of a breach of this Agreement, the Employer may seek injunctive relief and/or recover damages incurred as a result of the breach.”
- Provide consideration: Ensure the Employee receives adequate consideration, such as a signing bonus or additional compensation, in exchange for signing the agreement. Under Massachusetts law, continued employment alone is insufficient consideration for non-compete agreements.
- Example: “In consideration of the Employee receiving a signing bonus of $[Amount], the Employee agrees to the terms of this Agreement.”
- Outline governing law and jurisdiction: Ensure the agreement specifies that it is governed by Massachusetts law and identifies the appropriate courts for dispute resolution.
- Example: “This Agreement is governed by the laws of the Commonwealth of Massachusetts. Any disputes arising under this Agreement shall be resolved in the courts of [County], Massachusetts.”
- Include signatures: Both parties must sign and date the agreement to make it legally binding.
- Example: “IN WITNESS WHEREOF, the parties have executed this Employee Non-Compete Agreement as of the date first written above.”
Frequently asked questions (FAQs)
Q: Are Employee Non-Compete Agreements enforceable in Massachusetts?
A: Yes, Employee Non-Compete Agreements are enforceable in Massachusetts, provided they comply with the Massachusetts Noncompetition Agreement Act. The agreement must protect a legitimate business interest, be reasonable in scope, duration, and geographic area, and provide adequate consideration.
Q: What constitutes a "legitimate business interest" in Massachusetts?
A: Legitimate business interests include trade secrets, confidential information, customer relationships, and goodwill. General competition or preventing an employee from working in their chosen field is not considered a legitimate business interest.
Q: How long can a non-compete agreement last in Massachusetts?
A: Under Massachusetts law, non-compete agreements are typically enforceable for up to one year after employment ends. Longer durations may be deemed unreasonable.
Q: Can an Employee challenge a non-compete agreement in Massachusetts?
A: Yes, Employees can challenge non-compete agreements in court if they believe the agreement is overly broad, unreasonable, or does not protect a legitimate business interest. Courts may modify or invalidate unreasonable provisions.
Q: Does Massachusetts allow non-compete agreements for all types of employees?
A: No, Massachusetts prohibits non-compete agreements for certain categories of employees, including those classified as non-exempt under the Fair Labor Standards Act (FLSA), undergraduate or graduate students, and employees terminated without cause.
Q: Can an Employer enforce a non-compete agreement if the Employee is terminated without cause?
A: No, under Massachusetts law, non-compete agreements are unenforceable if the employee is terminated without cause. Employers must ensure the agreement explicitly addresses this limitation.
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This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.