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Enforceability of Massachusetts Non-compete Agreements

Noncompeting agreements are not favored by Massachusetts courts.  Often times a Massachusetts employer will require that an employee sign a non-compete agreement before that employs can start working.  That employee, may be reminded that they signed such an agreement after they have left the company and have moved on to another company and are served with a law suit.

It is well established that: …An employer cannot contract to prevent his employee from using the skill and intelligence acquired through experience or instruction received in the course of employment.  See the case of Richmond Brothers, Inc., v. Westinghouse, Broadcasting, Inc., 357 Mass. 106, 111 (1970).

Massachusetts courts have held that that covenants not to compete shall only be enforced to the limited extent that they serve a legitimate business interest of the employer.  Marine Contractors Co., v. Hurley, 365 Mass. 280, 287 (1974).  Non-compete agreements must be reasonably limited in time and space, with terms no more restrictive than needed See New England Service, Inc v. Ashley, 363 N.E.2d 526 (Mass. 1977).

Massachusetts court have consistently held that: A covenant not to compete that is designed to protect a party from ordinary competition does not protect a legitimate business interest.  Such legitimate business interests have been held to include: the protection of customer data, business and marketing plans, and the good will of the business.

It is well established that protecting the employer from ordinary completion is not a legitimate business interest.  Marine Contractors Co., v. Hurley, 365 Mass. 280, 287 (1974).

The key to determining whether a Non-compete agreement will be upheld Massachusetts courts have adopted a “four-part test” in which the court must weigh: (1) the likelihood the prior employer will be successful at trial on the merits; (2) the potential for irreparable harm to the prior employer; (3) a balancing of the equities, i.e., “the hardship to the employee if the noncompete agreement is issued verse the hardship to the former employer if relief is withheld and (4) the effect on the public interest of a grant or denial of the injunction. See Packaging Industries, Group, Inc., v. Cheney, 380 Mass. 609, 617 (1980).

The Massachusetts Supreme Judicial Court, (our highest court) has made clear that “where the moving party [employer] has failed to demonstrate that denial of the injunction would create any substantial risk that it would suffer irreparable harm, the injunction must be denied, no matter how likely it may be that the moving party will prevail on the merits.”  Massachusetts courts have defined irreparable harm as “harm that final relief cannot address.” It is also long standing position of the court that “…Contracts drafted by employers to limit the employment prospects of former employees…must be construed narrowly against the employer.” Richmond Brothers, Inc., v. Westinghouse, Broadcasting, Inc., 357 Mass. 106, 111 (1970)

If you have been asked to sign a Massachusetts non-compete agreement or if you are a defendant in a law suit to enforce a non-compete agreement and need assistance call Attorney John J. Martino of the Martino Law Group, LLC in Melrose MA to answer all of your litigation, employment, and corporate legal questions.  We are here to help you and your family with all of your legal needs.

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