While not directly relevant to employers who confine their business activities within Massachusetts, a New Hampshire law that took effect in July sends a warning on the effective use of non-competition agreements. Under the statute, New Hampshire employers will be barred from enforcing non-competition agreements that are not provided to their new hires at or prior to the time that a job offer is made. While Massachusetts now has no formal requirement like this one, the law as interpreted by many state court judges effectively requires the same thing.
In Massachusetts, employers seeking to enforce non-competition agreements bear a substantial burden in court. Among the requirements is proving that their contracts are valid. This requires a showing that the employee at issue was given something in exchange for his/her agreement not to compete. Since continued employment is generally not of sufficient value to support a contract, employers are effectively if not statutorily required to present non-compete agreements to their new hires before they start work. Failure to do so can invalidate an otherwise effective contract and render employers vulnerable to unfair competition from their former workers.
Massachusetts employers must also satisfy other requirements to enforce non-competition agreements and are wise to renew agreements with current workers whenever a promotion or other substantial job change occurs. Non-competes are generally enforceable in the Commonwealth to the extent they are reasonable and are geared to protect an employer’s legitimate business interests. Employers should carefully consider entering agreements with key employees and be diligent in maintaining valid contracts that reasonably protect them without limiting former employees more than necessary.