Massachusetts Non-Compete Agreements in a Nutshell
Non-competition agreements are more common today than ever before. I broach this subject because, a few months back, our Firm was successful in defending an employee against a Motion for Preliminary Injunction brought by her former employer. As we gear up for trial, I'd like to take this opportunity to review the nuts-and-bolts of non-competes.
Fortunately for employees and consumers, Massachusetts courts carefully scrutinize non-compete agreements and construe them against the employer. A covenant not to compete is enforceable only if: (1) it is necessary to protect a legitimate business interest, (2) reasonably limited in time and geographic scope, (3) consonant with the public interest, and (4) supported by consideration. The burden of proof as to the enforceability of a non-compete agreement lies with the employer.
What does all this mean? To address the first requirement, an agreement that attempts to merely prohibit ordinary competition does not satisfy a legitimate business interest. Employees may use the general skills and knowledge they acquired during their employment when they change jobs. Employees may not, however, use trade secrets or confidential information obtained from their former employer. The difference can be illustrated in the following hypotheticals using the (hilarious) TV sitcom, The Office:
(A) Michael Scott leaves Dunder Mifflin Infinity to work for a competitor, Staples, Inc., as a motivational speaker.
vs.
(B) Michael Scott leaves Dunder Mifflin Infinity to work for a competitor, Staples, Inc., in the same position. In doing so, Mr. Scott takes with him Dunder Mifflin's pricing models, confidential customer lists, vendor information, and (of course) his trusty side-kick, Dwight Schrute.
Dunder Mifflin's (DH) attempt to prohibit Mr. Scott from working for Staples in Hypothetical A would probably be construed as an attempt to stamp out ordinary business competition because, while Staples may be a competitor, Mr. Scott would neither be using any specialized training provided by DH nor confidential information to compete with Dunder Mifflin. On the other hand, Dunder Mifflin's effort to enforce a non-compete agreement in Hypothetical B would probably be interpreted as protecting a legitimate business interest since Mr. Scott would be poaching employees and using DH's trade secrets against them while in an identical role at his new job with Staples.
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