Massachusetts’ new non-compete agreement statute, The Massachusetts Noncompetition Agreement Act, may provide the blueprint for states like Illinois to follow in codifying the requirements for enforceability of non-competition agreements. Unlike in Massachusetts, much of the current non-compete law in Illinois is not statutory but has been developed at common law by judges over the years in a multitude of judicial opinions. Massachusetts has taken a different approach by choosing to codify its requirements for an enforceable covenant-not-to-compete. In doing so, Massachusetts joins states such as Utah and Idaho who have also recently passed laws regulating non-compete agreements.
The new Massachusetts law went into effect in late 2018 and applies only to non-compete agreements (also known as agreements-not-to-compete or covenants not-to-compete) entered into after October 1, 2018. As a result, its full ramifications have not yet been realized. The new law is an effort to regulate non-compete agreements by limiting their enforceability and codifying express requirements for enforceability. The new law applies not only to agreements with employees but also to agreements with independent contractors. To be enforceable under the new law, a non-compete agreement must (1) be in writing; (2) be signed by the employer and the employee; and (3) expressly state that the employee has the right to consult with counsel prior to signing. In addition, the employer must provide a copy of the non-compete agreement to the employee or independent contractor at the earlier of a formal offer of employment or ten business days before the start of the employment. Finally, non-competes entered during employment must be supported by independent consideration beyond continued employment.
The law also expressly sets requirements for the addresses traditional non-compete agreement common law requirements including time, geography, and scope restraints, a Massachusetts non-compete agreement will only be enforceable if the time restriction is one year or less post-employment (except in the event the employee breaches his fiduciary duties or stealers his employer’s property, then non-compete can last up to 2 years). A non-compete will be presumed reasonable in scope if it is: (1) limited to the geographic areas in which, within the last 2 years of employment, the employee provided services or had a material presence or influence and (2) limited to the specific types of services the employee provided during the last 2 years of employment. With regard to protective interests, the law expressly recognizes three types of protectable interests: trade secrets, confidential information, and employer goodwill.
If you are an employer seeking to protect your confidential or proprietary information or you are an employee being asked to sign a non-compete agreement, it is always advisable to seek the assistance of an experienced non-compete attorney. Lubin Austermuehle a firm of Chicago business dispute attorneys handles litigation over non-compete clauses for individuals and businesses of all sizes, including small or closely held businesses for whom competition from an ex-employee can be a serious threat. Super Lawyers named Illinois commercial law trial attorney Peter Lubin a Super Lawyer and Illinois business dispute attorney Patrick Austermuehle a Rising Star in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Illinois business trial lawyers have over thirty years of experience in litigating complex class action, copyright, noncompete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes. Our Villa Park and Hinsdale business dispute and restrictive covenant lawyers, civil litigation lawyers and copyright attorneys handle emergency business lawsuits involving copyrights, trademarks, injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist Chicago and Oak Brook area businesses and business owners who are victims of fraud. You can contact us by calling at 630-333-0333. You can also contact us online here.