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. Continue reading