Page 28 - BusinessWest March 17, 2021
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Non-competition Agreements
What Are Employers Really Getting with These Documents?
By Timothy M. Netkovick, Esq.
Everyone is aware of the honeymoon phase of the employment relationship — that time period when the employee
begins work and both parties are filled with high expectations for the relationship.
Possibly, prior to beginning the relationship, an employer has the employee sign a non- competition agreement as a sort of prenuptial agreement, hoping to never have to use it. How- ever, fast-forward a few years, the employment relationship goes sour, and the employee leaves the company. Not only does the employee leave the company, but they also begin soliciting cli- ents, or maybe even fellow employees, to join them at their new place of employment.
As employers are aware, Massachusetts enacted the Noncompetition Agreement Act in 2018. Prior to the act, there was little restriction on the contents of a non-competition agree- ment other than what terms would be enforced by a court in the event of a dispute. That changed with the provisions of the act. Now,
in the scenario above, if the employer sought to enforce the non-competition agreement, it would need to pay the former employee not to work during the competition period.
This is because the act mandates that, to be enforceable, a non-competition agreement
must contain a ‘garden-leave clause,’ defined as 50% of the employee’s highest annualized salary within the two years preceding termination.
competitor when the employment relationship ends. Instead, it serves to prohibit the former employee from soliciting clients and other employees of the former employer to join them
Employers therefore must answer the ques- tion: what do I
really want with
a non-competi-
“While the Noncompetition Agreement Act
requires employers to pay former employees not
to work, there may be other options available to
at their new place of employment. A non-solic- itation agreement can therefore be an effective tool in preserving the current status of the busi- ness by prohibiting a former employee from taking clients and other employees with them to their new place of employment.
A non-disclosure agreement also does not prohibit a former
 tion agreement?
Is it to stop the
former employ-
ee from work-
ing? Or is the
goal to maintain
the status of my
business? If the
goal is to main-
tain the status
of the business,
employers may be able to utilize non-solicita- tion and non-disclosure agreements, which can protect the former employer’s interests while also allowing the former employee to work.
Both such agreements are excluded from the definition of ‘non-competition agreement’ by the act, meaning they do not need to include garden-leave clauses.
A non-solicitation agreement does not pro- hibit a former employee from working for a
 employee from work- ing for a competitor
Continued on page 29
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    28 MARCH 17, 2021

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