Businesses use non-compete agreements to protect their competitive advantages. However, some situations create more legal conflict than others. The Massachusetts Noncompetition Agreement Act (MNAA) outlines what these situations are.
A former employee joins a direct competitor
One of the most common triggers for a lawsuit occurs when a former employee accepts a job with a direct competitor. Employers often worry that the worker could use insider knowledge to help the competing company. Because of these concerns, Massachusetts law places strict limits on when businesses can enforce non-compete agreements.
To remain valid under the MNAA, a non-compete must include a garden leave clause. This clause requires employers to pay workers at least 50% of their highest salary during the restricted period. Employers may also offer other mutually agreed considerations. Furthermore, non-competes are void against non-exempt employees. They also cannot apply to workers who were laid off or fired without cause.
A worker contacts former clients or customers
Client relationships represent some of a company’s most valuable assets. Problems also arise when a former employee contacts previous customers after leaving the business.
Note that customer non-solicitation agreements fall outside the MNAA. Instead, Massachusetts common law governs these agreements. Courts reviewing these claims often examine whether the contact amounts to active solicitation. They also assess whether the conduct violates basic fairness. These disputes often involve communication through LinkedIn, email, or other digital platforms.
A departing employee takes confidential information
Non-compete lawsuits often involve claims that an employee removed confidential information before leaving. Businesses may accuse former workers of downloading customer lists or trade secrets. Even one transfer of sensitive data can create serious concerns. Employers often move quickly to seek court orders preventing further use of the material.
In Massachusetts, courts examine whether the information truly qualifies as confidential. Courts also review whether the company took reasonable steps to protect the information. This analysis happens independently of any non-compete restrictions.
Non-compete disputes can escalate quickly. Speaking with an attorney who understands Massachusetts law may help parties protect their rights. It may also avoid costly mistakes during a dispute.
