Many observers in Massachusetts' business and legal communities
took note of legislative activity in the area of "non-compete
agreements" this past session, which concluded on July 31, 2010,
with no bills ultimately passing into law. Proposals included the
complete prohibition of any such restrictive
covenants,1 and the establishment of
specific income and time period limitations, pre-determined by
statute, in order for such agreements to be enforceable at
In anticipation of a much-needed economic recovery in this region
in the future, which is likely to be accompanied by an attendant
increase in employee mobility, all of the stakeholders that could
be affected in any future debate on this topic - employees,
employers, policymakers and attorneys -- would be well-advised to
take note of the substantial body of current Massachusetts law in
This article is meant to outline key principles that are routinely
and regularly recognized and enforced by Massachusetts courts with
regard to employment agreements that contain non-compete and
non-disclosure provisions which govern the rights and
responsibilities of both employers and employees here in the
Parties, including employees and employers, should and do have
the right to contract freely. It is in the public interest for our
courts to enforce valid agreements that are entered into
voluntarily and are supported by consideration. Companies acting in
trade and commerce often develop confidential information,
including trade secrets, that they are obligated to take steps to
protect under the law in order to preserve the value of that
property.3 Employers invest
substantially in training and developing employees who transact
business on their behalf using the company's confidential
information (such as, by way of example only, client lists) to
thereby build valuable goodwill with
Outside of any agreements, Massachusetts statutory and common law
guards against misappropriation of trade secret information by a
departing employee. Employers may and do properly also use
confidentiality agreements to place their employees on notice of
their obligation not to use or disclose truly proprietary company
That said, Massachusetts courts will not protect an employer that
(i) forces an employee to enter into an employment agreement that
primarily resembles a contract of adhesion and is executed under
duress, (ii) improperly attempts to interfere with an employee's
right to make a living, or develop his or her own professional
goodwill and expertise, and (iii) merely uses litigation to chill
genuine competition in the marketplace and thereby asks the courts
to enforce a non-compete provision that is overly broad in scope
Massachusetts courts enforce non-compete agreements
when to do so is reasonable
Outside of a few specific fields,6
for many decades Massachusetts courts have enforced restrictive
covenants governing post-employment conduct by a departing
employee. These have been found to be "enforceable only if it is
necessary to protect a legitimate business interest, reasonably
limited in time and space, and consonant with the public interest"
and "valid if they are reasonable in light of the facts in each
case."7 These matters have therefore
been analyzed on a case-by-case
The Massachusetts Supreme Judicial Court has specifically
categorized those legitimate employer interests which provide a
satisfactory basis for enforcement of a non-compete
It is sufficient to state that the interests which may be
protected have fallen into three generic categories: (1) trade
secrets ... (2) confidential data ..., and (3) goodwill ... If any
or all of these interests are present in a given case in which a
non-competitive covenant is part of a contractual agreement, then
in the absence of equitable factors which would militate against
enforcement ... a court of equity will not deny enforcement of a
Although the question is not completely settled, the employment an
employer provides to an at-will employee can constitute sufficient
consideration to establish an enforceable non-compete agreement,
and (particularly where an employment agreement is provided in
advance, and executed at the time of hiring) has routinely been
found to be valid.10
Massachusetts courts have not enforced restrictive
covenants broadly or to prevent healthy competition in the
Several principles have emerged in Massachusetts common law
which will affect the ability of employers to enforce non-compete
agreements against departing employees.
Non-competition agreements are construed narrowly and against
employers in order to guard against the potential for unequal
bargaining power that may be present in the
contract.11 They cannot be used solely
to protect an employer from ordinary competition in the
workplace.12 It is best to enforce
these promptly, and an employer that fails to action to protect its
interests after receiving notice of a clear violation may be found
to have slept on its rights.13
A material change in an employee's job duties and responsibilities
will often result in a court finding that the agreement governed
only that prior position and has been
If an employer discharges an employee prior to the expiration of
an employment contract for a fixed term that contains a non-compete
provision, in a manner constituting a material breach by the
employer, this has the potential to excuse the employee from the
requirement to honor the restrictive
Finally, in a fairly recent case (upheld on appeal), an aggressive
lawsuit was filed against a former employee to enforce a
non-compete with what the court found to be an improper motive,
brought based on limited investigation and ultimately insufficient
evidence, which efforts completely boomeranged and resulted in the
employer itself being found liable for an unfair act in trade and
commerce. The employer was forced to pay treble damages and
attorneys' fees to its former
Although the terms of many employment agreements may often be
identical from one business to the next, whether or not enforcement
of a non-compete provision against an employee is reasonable under
the circumstances will be determined by the actual facts presented
by a given employee's departure from an employer. Massachusetts
courts have historically displayed a consistent willingness to
examine these disputes in detail and take appropriate steps,
including injunctive relief if necessary, to protect both
employers' and employees' legitimate -- but sometimes conflicting
-- rights when this happens.
Given the nearly unlimited variety of industry-driven issues
confronted by both employers and employees when they part ways,
Massachusetts policymakers should not overlook established
precedence and well-developed common law before creating any new
statutory standards (which may well have unintended consequences)
to govern such an occurrence.
Our economy and region have traditionally provided a welcome home
to many successful and growing businesses, as well as their
employees, under the current legal framework described above. Given
the current economic climate, it would be wise to tread carefully
before tilting -- in either direction -- this challenging but often
fairly resolved balance of interests.
Raymond P. Ausrotas is a partner at Todd & Weld LLP in
Boston, where his practice focuses on commercial and general
litigation, including trade secret disputes. Ausrotas is the vice
chair of the Civil Litigation Section Council of the Massachusetts
Bar Association for the 2010-11 term.
1See H.R. 1794, 186th General Court (Mass.
2See H.R. 4607 186th General Court (Mass.
3See, e.g. Jet Spray Cooler, Inc. v. Crampton,
361 Mass. 835, 840 (1972)).
4See, e.g. Warner-Lambert Co. v. Execuquest
Corp., 427 Mass. 46, 49 (1998).
5See,e.g. Eastern Marble Products Corp. v. Roman
Marble, Inc., 372 Mass. 835, 839-40 (1977).
6Restrictions on employment of physicians, nurses and
social workers are prohibited. See M.G.L. c. 112, §§ 12X, 74D,
135C. A similar statute exists which is applied to certain
broadcasting outlets that terminate their employees. See M.G.L. c.
149, § 186. Attorney ethical rules prevent any restrictions on
their employment in order to protect a client's right to counsel of
his or her choosing. 6See Mass. R. Prof. Conduct
7Boulanger v. Dunkin' Donuts Inc., 442 Mass.
635, 639 (2004) (citing to Marine Contrs. Co. v. Hurley, 365 Mass.
280, 287-89 (1974) and All Stainless, Inc. v. Colby, 364 Mass. 773,
8Novelty Bias Binding Co. v. Shevrin, 342
Mass. 714, 716 (1961).
9New England Canteen Service v. Ashley, 372
Mass. 671, 674 (1977).
10See, e.g. Economy Grocery Stores Corp. v.
McMenamy, 290 Mass. 549, 552 (1935); Sherman v.
Pfefferkorn, 241 Mass. 468, 473 (1922); see also Wilkinson
v. QCC, Inc., No. 99-P-1854 (Mass. App. Dec. 21, 2001)
(unpublished memorandum under Rule 1:28); Stone Legal Res.
Group, Inc. v. Glebus, reprinted at 2002 Mass. Super. LEXIS
555 (Mass. Super. - Dec. 17, 2002). But see IKON Office
Solutions, Inc. v. Belanger, 59 F.Sup.2d 125, 130-32 (D. Mass.
1999); Tyler Techs., Inc. v. Reidy, No. 06-4404-BLS1,
reprinted at 21 Mass. L. Rep. 669, 2006 Mass. Super. LEXIS 59
(Mass. Super. Ct. - Suffolk, Oct. 30, 2006).
11See, e.g. Sentry Ins. V. Firnstein, 14 Mass.
App. Ct. 706, 707 (1982).
12See Lajoie Investigations, Inc. v. Griffin,
reprinted at 1996 Mass. Super. LEXIS 518 (Mass.
Super. - March 11, 1996).
13See, e.g. Stewart v. Finkelstone, 206 Mass.
28, 36 (1910); Alexander & Alexander v. Danahy, 21
Mass. App. Ct. 488, 494-95 (1986); see also Optical Publ. Co.
c. McCue, No. 83-0474-F, reprinted at, 1984 U.S. Dist. LEXIS
17989, *17-18 (D. Mass. - Apr. 2, 1984).
14See AFC Cable Sys. v. Clisham, 62 F. Supp.
2d 167, 173 (D. Mass. 1999); Lycos, Inc. v. Jackson, No.
04-3009, reprinted at, 18 Mass. L. Rep. 256 , 2004 Mass.
Super. LEXIS 348, *10 (Mass. Super. Ct. - Middlesex, Aug. 25,
15See, e.g. Ward v. American Mut. Liability Ins.
Co., 15 Mass. App. Ct. 98, 100-101 (1983).
16See Brooks Automation, Inc. v. Blueshift Techs.,
Inc., No. 05-3973-BLS2, reprinted at 2006 Mass.
Super. LEXIS 18 (Mass. Super. Ct. - Suffolk, Jan. 17, 2006),
aff'd, 69 Mass. App. Ct. 1107, review denied, 449
Mass. 1110 (2007).