Make a Massachusetts Non-Compete Agreement

Applicable State Laws - Mass. Gen. Laws c. 149, § 24L (for all non-compete agreements signed on or after October 1, 2018) 

The Massachusetts Noncompetition Agreement Act governs non-compete agreements in specific types of services. The exempted services include:

• Broadcasters
• Physicians
• Nurses
• Social workers
• Psychologists

As of 2018, a new law includes the Fair Labor Standards Act exemptions of:

• Nonexempt employees
• Student interns, likely including graduate students
• Short-term student employees
• Employees terminated without cause
• Former employees laid off
• Employees who are younger than 18 years of age

It's important to note that unlike many states, Massachusetts law does not count continued employment as adequate consideration. In fact, it requires what is known as a garden leave clause.

According to an article by the Boston Globe, a garden leave clause states that when a former employee is unable to work because of geographic areas or time period restrictions, employers are required to pay the former employee at least 50% of their base salary.  This helps ensure that post-employment life is easier for former employees and that public policy is not violated.

Employers should seek legal advice about the new Massachusetts law because it could be likely that they would need to consider paying 50% of the employee's highest annualized base salary. A non-compete agreement may only be as broad as necessary to protect legitimate business interests, including trade secrets, confidential information, and goodwill.

Additionally, a non-compete agreement must be provided to an employee 10 business days in advance, or before a formal offer is made. The business must make it known that the party has the right to seek legal advice before signing the agreement.

A non-compete agreement works best when paired with a non-solicitation agreement as well as a non-disclosure agreement.

Protect your Massachusetts business by also using a Massachusetts non-disclosure agreement form. Download a Massachusetts non-disclosure agreement form now!

How to Write a Massachusetts Non-Compete Agreement

To write a Massachusetts non-compete agreement, first review the Massachusetts Noncompetition Agreement Act. Include the following clauses in your non-competition agreement:

• Purpose. This clause explains the purpose of the non-compete agreement, which is to protect your company’s confidential information. It also identifies the parties and their roles and includes the effective date of the contract. It may also state that the term "confidential information" will be referred to as "proprietary information."
• Non-compete. This clause lists the restrictions of the non-compete. Keep in mind that the State of Massachusetts has several restrictions. The following are general examples of the types of restrictions found in such a clause: restrictions on the time period, geographical area, general and specific business practices, working for general and specific competitors, general and specific business activities, solicitation of clients and customers, and solicitation of employees.
• Time period. This clause may restate the time limit of the non-compete. Then, the clause states when the time period begins: either when the employment relationship begins or when it ends.
• Purchase option. This clause states whether your business will allow the signing party to buy their way out of the agreement. If so, the amount that the signing party must pay will be listed in this clause.
• Jurisdiction. This clause states that Massachusetts law will be used to govern the non-compete agreement.
• Confidential information. This clause states that the term "confidential information" as it is used throughout the agreement means any and all technical and non-technical information provided by your business that includes, and is not limited to, any data or other proprietary information related to products, inventions, plans, methods, processes, developmental products, experimental products, intellectual property, software, databases, customer lists, vendor lists, supplier lists, marketing methods, reports, business plans, financial information, or other matters pertaining to your business or other clients, customers, consultants, or licensees, that is disclosed to the other party under the terms of the non-compete agreement.
• Permitted disclosure. This clause explains when information is no longer considered confidential. Generally, this occurs when information becomes public through no fault of the singing party, when information is discovered by the signing party on their own without any breach of another party, or when your company provides written consent to release certain information.
• Confidentiality. This clause states that the receiving party acknowledges the information they may receive is confidential and they agree they will not directly or indirectly communicate it to another party. They also agree that the information may not be used for any other reason except to further your business without written consent from your business.
• Consultants and employees bound. This clause states that both consultants and employees are bound by the non-compete agreement to keep the confidential information strictly confidential. It also states that they are on a need-to-know basis.
• Return of materials. This clause states that upon the termination of the non-compete agreement or upon notice by your business, the signing party is required to promptly return all documents and other tangible material that represents the confidential information of your business and any existing copies. It also states that your business will notify the signing copy of any loss or unauthorized disclosure of the confidential information.
• Remedies. This clause explains the remedies your business is entitled to pursue under Massachusetts law if the signed party breaks the terms of the noncompete agreement. Examples of remedies include court costs, reasonable attorney fees, the award by a court of a temporary restraining order or a preliminary injunction against the unauthorized use, etc., as well as all other remedies available under Massachusetts law or equity.
• Choice of law. Also known as a choice of law provision, this clause states that the parties choose Massachusetts law to govern the agreement.
• Entire agreement. This final clause states that the entire agreement may be amended in writing, but it must be signed by both parties.

The parties should sign and print their names. The signatures should be dated. Each party should receive a copy of the finalized non-compete agreement for their records.