A noncompete agreement is unenforceable against nonexempt workers, and the contract must be in writing with signed consent from both parties, according to Massachusetts General Court.
Noncompete agreements are enforceable only for exempt employees with written consent
The first legal term you must verify is the worker classification limit. The statute explicitly states that a noncompetition agreement shall not be enforceable against an employee who is classified as nonexempt under the Fair Labor Standards Act, 29 U.S.C., according to Massachusetts General Court. If your new hire falls under the nonexempt category, the agreement cannot be enforced against them.
The second legal term is the written signing requirement. The law mandates that the agreement must be in writing and signed by both the employer and the employee, according to Massachusetts General Court. Verbal consent or unsigned drafts do not meet this standard. Furthermore, the document must expressly state that the employee has the right to consult with counsel prior to signing, according to Massachusetts General Court. This clause protects the employee’s ability to seek legal advice before committing to the restrictive covenant.
| Term | Statutory Requirement | Publisher |
|---|---|---|
| Worker classification | Agreement unenforceable against nonexempt employees under FLSA | Massachusetts General Court |
| Written agreement | Must be in writing, signed by both parties, and state right to consult counsel | Massachusetts General Court |
Key takeaways for how to draft a compliant noncompetition agreement for exempt employees
Verify these eight legal terms before sending an offer letter to an exempt employee. First, confirm the worker is exempt under the Fair Labor Standards Act, as nonexempt employees cannot be bound by a noncompetition agreement according to the Massachusetts General Court. Second, ensure the agreement is in writing and signed by both parties. Third, include an express statement that the employee has the right to consult with counsel prior to signing, as required by the Massachusetts General Court. Sixth, recognize that a court may reform the agreement to render it valid and enforceable. Eighth, understand that "employee" includes independent contractors under section 148B of the chapter according to the Massachusetts General Court.
Defining the scope of protected workers
The Massachusetts General Court defines an "employee" in General Law - Part I, Title XXI, Chapter 149, Section 24L as an individual who is considered an employee under section 148B of this chapter, according to Massachusetts General Court. The same section specifies that the term "employee," as used in this section, shall also include independent contractors under section 148B, according to Massachusetts General Court. This definition establishes the specific class of workers to whom the noncompetition provisions apply.
The statute also defines the entity that may impose these restrictions. The Massachusetts General Court defines a "business entity" in General Law - Part I, Title XXI, Chapter 149, Section 24L as any person or group of persons performing or engaging in any activity, enterprise, profession or occupation for gain, benefit, advantage or livelihood, whether for profit or not for profit, according to Massachusetts General Court. The definition includes but is not limited to corporations, limited liability companies, limited partnerships or limited liability partnerships, according to Massachusetts General Court. This broad definition ensures that various organizational structures are covered by the statute's requirements.
When reviewing a new hire's classification, check whether they fall under section 148B of the chapter. If the individual is an independent contractor under section 148B, they are included in the definition of "employee" for the purposes of this section, according to Massachusetts General Court. Confirm that your firm qualifies as a business entity under the statute's definition before proceeding with the agreement. The statute covers entities performing activities for gain, benefit, advantage, or livelihood, whether for profit or not for profit, according to Massachusetts General Court.
Drafting the written agreement and counsel rights
The document must expressly state that the employee has the right to consult with counsel prior to signing, according to Massachusetts General Court.
Do not rely on verbal assurances or implied rights, as the requirement for an express statement is mandatory, according to Massachusetts General Court. Ensure both parties sign the final document to satisfy the signing requirement, according to Massachusetts General Court.
This step aligns your documentation with the specific writing and signing standards outlined by the Massachusetts General Court.
When drafting the clause, place the statement about counsel rights near the signature block for visibility. Keep the language clear and direct to avoid ambiguity about the employee's rights before they sign.
Check that the document is not just a draft but a finalized agreement signed by both parties. The requirement for both signatures means a unilateral document is insufficient, according to Massachusetts General Court. Use this checklist to confirm your paperwork meets the written and signed standards before onboarding begins.
Establishing legitimate business interest and necessity
When drafting a restrictive covenant, you must determine if a noncompetition agreement is truly required. The law provides a specific test for this determination. According to Massachusetts General Court, a noncompetition agreement may be presumed necessary where the legitimate business interest cannot be adequately protected through an alternative restrictive covenant.
You should evaluate whether less restrictive options are sufficient. The statute explicitly lists examples of alternative restrictive covenants. These include a non-solicitation agreement or a non-disclosure or confidentiality agreement, according to Massachusetts General Court. The phrase "including but not limited to" indicates that the list of alternatives is not exhaustive.
If you can show that a non-solicitation agreement would not adequately protect your legitimate business interest, you have a stronger case for a noncompete. The core requirement is that the legitimate business interest cannot be adequately protected through the alternative means.
Review your specific business interests. Identify what exactly you are trying to protect. Is it customer relationships, trade secrets, or specialized training? Then, assess if a non-solicitation or non-disclosure agreement covers those specific interests. If the answer is no, you may proceed with drafting the noncompetition clause.
Ensure your documentation reflects this analysis. State clearly why alternative covenants were deemed inadequate. This supports the presumption of necessity. If a court later reviews the agreement, this documentation will be critical. The law allows for this presumption, but you must still meet the underlying requirement of legitimate business interest.
Handling unenforceable clauses and judicial reform
If a court finds a specific noncompetition clause unenforceable, the rest of your employment agreement does not automatically become void. This severability principle means you can maintain other protective terms in the employment relationship even if the noncompete itself fails a legal challenge. You should structure your offer letters so that restrictive covenants are distinct, clearly marked sections. This allows a court to strike the problematic noncompete while leaving the rest of the employment terms intact.
Courts also have the discretion to modify an agreement to make it valid. According to the Massachusetts General Court, a court may, in its discretion, reform or otherwise revise a noncompetition agreement so as to render it valid and enforceable to the extent necessary to protect the applicable legitimate business interests. This judicial reform power means that a noncompete drafted with overly broad geographic or temporal limits might not be thrown out entirely. Instead, a judge could adjust the scope to align with what is legally permissible for protecting your business. You cannot rely on a court to fix a poorly drafted agreement, but you should understand that the outcome of a dispute may involve a revised, narrower restriction rather than a total invalidation.
Furthermore, the existence of an unenforceable noncompete does not prevent a court from imposing other restrictions. According to the Massachusetts General Court, the section does not preclude the imposition of a noncompetition restriction by a court, whether through preliminary or permanent injunctive relief or otherwise, as a remedy for a breach of another agreement or a statutory or common law duty. This means that even if your written noncompete is invalid, a court might still issue an injunction based on other duties or agreements. For example, if an employee breaches a confidentiality agreement, a court could impose a noncompetition restriction as a remedy for that breach. You should ensure your confidentiality and non-solicitation agreements are robust, as they provide an alternative path for judicial protection if the noncompete is unenforceable.
Choice of law and residency requirements
These clauses have strict limits when the employee lives or works in Massachusetts. According to the Massachusetts General Court, a choice of law provision that would have the effect of avoiding the requirements of the section is not enforceable if the employee is a resident of or employed in Massachusetts at the time of termination of employment ( Massachusetts General Court). The statute specifies that this restriction applies if the employee has been a resident of or employed in Massachusetts for at least 30 days immediately preceding the cessation of employment ( Massachusetts General Court).
If your small firm hires remote workers who reside in Massachusetts, you cannot simply point to another state’s more lenient noncompete laws to avoid these specific residency requirements. You must verify the employee’s residency status and employment history for the final month before termination to determine if this clause applies.
The law explicitly states that such provisions are not enforceable in these specific circumstances ( Massachusetts General Court). This means that for any exempt employee who has lived or worked in Massachusetts for the last 30 days, the local statutory requirements remain in force regardless of what the contract says about governing law.
FAQ: How to draft a compliant noncompetition agreement for exempt employees
Can I enforce a noncompete against a nonexempt employee?
No. Under the Massachusetts General Court, a noncompetition agreement shall not be enforceable against an employee who is classified as nonexempt under the Fair Labor Standards Act, 29 U.S.C. Massachusetts General Court. This rule applies specifically to workers falling under that federal classification.
Does the employee have the right to consult a lawyer before signing?
Yes. The Massachusetts General Court requires that the agreement expressly state the employee has the right to consult with counsel prior to signing. Massachusetts General Court. The agreement must also be in writing and signed by both the employer and the employee.
What happens if part of the noncompete is found unenforceable?
The remainder of the contract is not rendered void or unenforceable. According to the Massachusetts General Court, the section does not invalidate the rest of the agreement containing the unenforceable noncompetition clause. Massachusetts General Court. Courts may still impose noncompetition restrictions as a remedy for breaching other agreements or duties.
Can a court modify the terms of the agreement to make it valid?
Yes. A court may, in its discretion, reform or otherwise revise a noncompetition agreement to render it valid and enforceable. Massachusetts General Court. This revision is permitted to the extent necessary to protect the applicable legitimate business interests.
Does a choice of law clause avoid these requirements if the employee lives in Massachusetts?
No. A choice of law provision that avoids these requirements is not enforceable if the employee is a resident of or employed in Massachusetts. Massachusetts General Court. This applies if the employee has been a resident or employed there for at least 30 days immediately preceding their cessation of employment.