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Non-Compete / Non-Solicit Agreements & Litigation

A restrictive covenant, such as a non-compete agreement or non-solicit agreement is enforceable in Massachusetts if it is reasonably limited in time and space, necessary to protect a legitimate interest, and consonant with the public interest. Massachusetts recognizes the protection of trade secrets, confidential information, and good will as legitimate business interests worthy of protection through such post-employment restrictions. Non-competition agreements typically appear in two major contexts: the sale of a business or business assets, and the employment relationship. Generally speaking, covenants not to compete used in the context of a business sale are tolerated by the Massachusetts Courts to a much greater degree than noncompetes in the employment context. There is a strong public policy favoring the freedom of individuals to move from job to job and earn a living which is often in direct conflict with the public policy behind allowing businesses to protect their legitimate interests. There is typically no such hesitation where a business owner sells his business and voluntarily signs a noncompete agreement to prevent him from depriving the new owner of the company's good will. However, the law is clear, even in the employment context, that the policy protecting legitimate business interests controls when an employee or other parties engage in unfair competition, such as by misappropriating trade secrets or confidential information.

There are numerous issues to track when drafting a non-compete agreement. The scope of the covenant should be tailored to the individual being restrained, his exposure to the protectible interests of the business, his level of threat to the business, and the realities of the industry in question. It may certainly be reasonable to require a high-level executive in a business catering to the needs of national airlines to sign a noncompete agreement prohibiting him from working anywhere in the industry throughout the United States for two years. The same is not true for the vice president of sales of a small IT firm working solely in greater Boston. It takes careful drafting and knowledge of the current state of non-compete and non-solicit law to create an appropriate, effective and enforceable covenant not to compete. Boilerplate noncompete agreements and hastily-drafted covenants are frequently torn apart in court, where law and equity may wreak havoc on poorly drafted post-employment restrictions.

If you or your business require legal advice, drafting services or representation in litigation with regard to a noncompete agreement, a non-solicit agreement or any other form of restrictive covenant, call Toomey Legal.