Restrictive Covenants And Noncompetition Agreements
Restrictive covenants include employee confidentiality agreements, non-competition agreements, and non-solicitation agreements. Generally speaking, these can be included in offer letters, employment agreements, employee handbooks, or stand-alone policies.
They can be enforceable in Massachusetts, depending on the language of the provision. Therefore, it is critical to consult with an experienced lawyer to determine whether any restrictive covenant may limit your ability to accept another job offer, or whether you are limited in the type of work you can perform with a new employer.
At Porter Law, we can review the language of these agreements and explain their meaning and effect. We can also assist you before you leave an employer to negotiate the terms of a restrictive covenant or noncompetition agreement.
Confidentiality agreements are the easiest agreements to enforce, assuming that the information your employer is seeking to protect constitutes trade secrets or commercially sensitive information, such as, for example, business plans, pricing information, and customer lists.
To the extent that a company has taken reasonable steps to protect that type of information, a court will set limits on an employee’s use of it at a future job. If the court is convinced that by merely knowing the information – even if you don’t consciously use it – you may be able to unjustly benefit from the confidential data, it can restrict your ability to work for a competitor.
Noncompetition agreements can be enforceable, assuming the company can show that it has a legitimate business reason for limiting your ability to work in the same marketplace.
The key to such provisions is that they be reasonable in time and scope, but if they are not, a court can take a “blue pencil” to the agreement and narrow its scope (i.e., its geographic area or target market) and time.
Nonsolicitation agreements are also potentially enforceable, as they relate to contacts with existing customers as well as your former employer and employees. However, there is nothing that should prevent you from doing business with former customers or hiring former employees if they come to you first. The key is not to solicit them, which is also known as poaching.
When looking at these types of provisions, it is important to focus on more than just the language of the agreement. Other questions that need to be considered are whether your employer has taken an aggressive approach to enforcement in prior situations or has just used the restrictive covenant language as a deterrent. Another consideration is whether your current employer will support you in the event that your former employer tries to enforce the agreement.
You will also need to consider what you should share with your new employer about any restrictive covenants that might limit your ability to work in your new position. The answers to these questions will help you determine whether a new job is worth the risk of violating the restrictive covenant.
For guidance with issues related to restrictive covenants and noncompetition agreements, call our Boston office at 617-843-9332 or use our online contact form.