Massachusetts Employment Law Update – August 2018

Noncompete Agreements and Trade Secrets

On August 10, 2018, Massachusetts Governor Charlie Baker signed legislation (House Document 4868 which amended H.B. 4732) banning employment noncompete agreements in Massachusetts that:

• Are not in writing.
• Are not signed by employer and employee.
• Do not state that the employee has the right to consult with counsel prior to signing.

The law is applicable to employees and independent contractors and defines other parameters and procedures for implementation, such as:

• Employer-provided notice.
• Reasonable scope for geographical and activity restraints.
• Recognition of three specific legitimate business interests that are necessary for an employer to protect for the agreement to be enforceable.
• Payments to a former employee of at least 50 percent, at his or her highest salary within the past two years, for the duration of the noncompete agreement (unless an employee is in breach).
• Limitations on enforceability.

The legislation also adopted the Uniformed Trade Secrets Act.

The law is effective October 1, 2018.

Read MA House Document 4868