In the current state of the economy, receiving an employment offer may seem like the best news that could be delivered, especially once you finally receive the offer officially in writing. However, that moment could certainly be diminished by a contract provision, carefully crafted and positioned within the document that could significantly affect your future, even past this current employment. That provision is called a non-compete clause.
A Non-compete clause or covenant not to compete (CNC), is used when one party (usually an employee) agrees not to pursue a similar profession or trade in competition against another party (usually the employer), and usually requiring a reasonable geographic restriction and timeframe. Most states legally allow these contract provisions, including Massachusetts. California is one state that completely prohibits the use of them, except in limited circumstances (for instance, in the sale of the business).
Therefore, largely based upon what some call non-compete “abuse” by employers, Massachusetts’ Representative William H. Brownsberger introduced legislation (H. 1794) that called for the prohibition of non-compete agreements, except in limited circumstances (similar to the California law). Of course, this has lead to many discussions regarding the danger of these agreements and whether they diminish labor mobility or innovation within the market. This is certainly a concern for those professionals who wish to strike out on their own and form start-up companies, only to find out that they are restricted or subject to tremendous litigation fees from their efforts.
Rep. Brownsberger’s bill seemed to be generating enough momentum and support for his bill, that many thought these agreements might finally be dead in Massachusetts. However, this summer, Rep. Brownsberger seems to have backed-down a bit from his strict stance and joined with Rep. Lori Ehrlich to draft a new, compromised bill, that is not as restrictive on these agreements. Surprisingly, the bill introduces many features that some say may make these agreements even MORE prevalent, including the use of presumptive reasonableness within the endorsed parameters. Consequently, if the legislation so clearly and particularly outlines what is considered reasonable, then drafting these provisions will be essentially easy for the employers, and will further promote them (the exact opposite a result that Rep. Brownsberger intends). We will have to wait to see how the legislature ultimately votes on this issue this fall.
So, what is the ultimate lesson to be learned here? First, Non-compete agreements are not things to be ignored, when looking over your contract. You would be advised to have a reputable attorney look over your agreement, to determine if it is reasonable and suits your needs. Second, remember that non-competes are still fully alive in Massachusetts, until further notice, and could significantly affect your employment prospects in the future. And in today’s economy, no one wants to be left out in the cold when it comes to the future of his or her employment.
By Attorney Kelly L. Swan Taylor