Page 18 - BusinessWest October 3, 2022
P. 18

Let the Buyer Beware
How the Use of Non-competes Is Becoming Ever-more Restricted
By Alexander Marsh and Jeremy Saint Laurent, Esq.
Historically, non-competition agree- ments have been a useful tool for employers to protect their businesses,
financials, and proprietary information when a departing employee leaves the company to work for a competitor. Over the past decade, the ways in which non-competition agree- ments can be used has been restricted.
Indeed, Massachusetts has significantly lim- ited the functionality of non-competes, and Cal- ifornia has barred them altogether. Recently, the federal government, vis-a-vis the Federal Trade Commission, has limited their use in corporate mergers and acquisitions.
Just four years ago, in October 2018, Mas- sachusetts practically banned non-competes through the creation of very specific and strict requirements. As a threshold matter, non-com- petes in Massachusetts cannot be freely used and, rather, must protect a legitimate business interest. The definition of legitimate business interest is limited to trade secrets, confiden- tial information of the employer that other- wise does not qualify as a trade secret, or the employer’s good will.
Other alternative restrictive covenant, such as non-solicitation, non-disclosure, and/or con-
ALEXANDER MARSH
JEREMY SAINT LAURENT
“In October 2018, Massachusetts practically banned non-competes through the creation of very specific and strict requirements. As a threshold matter, non-competes in Massachusetts cannot be freely used
       and, rather, must protect a legitimate business interest.”
  fidentiality agreements, must be explored prior to resorting to a non-compete.
Massachusetts further tightened up the abil- ity to implement non-competes by creating a litany of other requirements. The non-compete must:
• Be in writing;
• Be signed by both the employer and the employee and state that the employee has a right to consult a lawyer before signing the
agreement;
• Provide notice of the agreement to the
employee (the notice requirements change depending on when the employee is asked to sign the agreement); and
• Occur at the beginning of employment
or provide notice of the agreement no less than 10 business days before the agreement would become effective and provide additional compensation.
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   18 OCTOBER 3, 2022
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