Tag Archives: Massachusetts noncompete

Massachusetts Noncompetition Agreements: Consideration

By on March 1, 2016

We have discussed the basics of non-competition agreements (“non-competes”) in Massachusetts, particularly the need to have reasonable restrictions supporting a “legitimate business interest.” Non-competes often include additional restrictions, such as non-solicitation and nondisclosure clauses. Beyond that, non-competes usually contain several provisions commonly found in legal documents. This post is the first in a series covering terms commonly found in non-competes.


Every contract must include “consideration,” and non-competes are no exception. “Consideration” is the benefit that each side receives from a contract. Without valid consideration for each party to a contract, the contract will not be enforceable. In the employment context, it is very common for employers to have employees sign non-competes when they are hired. In Massachusetts, a job offer is valid consideration for an employee entering a non-compete agreement: the employee receives a job offer, while the employer receives the employee’s willingness to agree not to compete with the employer. Thus, employers are wise to have employees sign any restrictive contracts when the employee is hired.

However, sometimes non-competes are not signed when the employee is hired. If employment has already begun, an employer has two options. One option is use “continued employment” as consideration. The Massachusetts Appeals Court has held that continued employment is valid consideration (Wilkinson v. QCC, Inc., 53 Mass. App. Ct. 1109 (2001)), which is consistent with other jurisdictions, but the Supreme Judicial Court has not addressed the issue. For any employers concerned that a future court may find continued employment to be insufficient (and to oppose an employee’s argument that the agreement was only signed under duress), employers should consider offering additional consideration: a raise, a promotion, a bonus, more vacation time, and the like, along with continued employment.   

Although consideration often seems like an obvious part of any contract, it is vitally important. Any effective litigator will pick apart a contract to argue that adequate consideration was not provided, rendering the contract unenforceable. Consideration should be specifically discussed in the contract and actually provided to the employee (in other words, do not promise what you cannot deliver).

Material Change

While a job offer is valid consideration, if the employee’s job substantially changes, the non-compete may not be valid. This is based on a legal concept called “material change.” The argument is that if the employee’s new job is so different from the job that they were hired to do (and the job that served as consideration to sign the non-compete), consideration is no longer present and thus the non-compete is unenforceable. Massachusetts courts are divided on the issue, with some holding that only a reduction in the employee’s pay is a sufficient change to void the non-compete. Other courts have found that if an employee is promoted and given new responsibilities, a non-compete signed when first employed is likely unenforceable. As is often the case, the enforceability of a non-compete can be a fact-intensive endeavor. Both employers and employees should consult with an experienced Massachusetts employment attorney to determine their rights and options.

Loyalty Duties for Corporate Executives

By on October 13, 2015

In certain circumstances, an effective non-competition agreement can help protect company assets and interests. However, the law recognizes some protections that exist even outside of a signed agreement. A recent Massachusetts appellate court case, AGERO, INC. v. RUBIN, addressed some of these protections. Agero involved a company suing two former employees who were alleged to have taken confidential information from their employer to start a competing business. One of the employer’s claims was that, in the absence of a contractual obligation, the employees still owed the company a “duty of loyalty” that prevented the employees from leaving the company with confidential information to start a competing business.

The law has long recognized that employees occupying positions of confidence and trust owe a duty of loyalty to that employer, which requires the employees to protect the employer’s interests. Employees subject to the duty of loyalty are not mere common employees who are easily replaceable. The courts will only impose such a duty on high-ranking executives and individuals with access to truly sensitive, proprietary information. This includes officers and directors although the individuals in question need not be officers and directors to trigger the duty (corporate directors are also subject to other legally imposed duties beyond the scope of this article).

The duty of loyalty means such employees are bound to act solely for their employer’s benefit during their employ, and among other things are barred from actively competing with the employer during the term of employment. Access to confidential information can also trigger the duty of loyalty, but such confidential information must be of high value and truly confidential, meaning the employer has taken measures to protect the information.

In Agero, the trial court sided with the employees, and that decision was upheld on appeal. Although the courts acknowledged the duty of loyalty argument, the employees in question were not subject to the duty. The two employees were best categorized as “rank and file,” both answering to higher level managers and lacking the authority to move forward on the projects discussed in the suit. Further, the information the employees possessed had minimal value and was not particularly secret.

There are a few takeaways from Agero. Even absent contractual agreements, high-ranking employees are still legally bound to loyalty to their employer. However, only employees occupying positions of trust and confidence will be bound by such a duty, so employers should consider non-competition agreements for lower-ranking but still valuable employees, assuming that employers can demonstrate legitimate business interests. Finally, merely labeling information as “confidential” does not necessarily make it so; the information must be truly valuable and affirmative steps must be taken to preserve its secrecy. Employers should still seek to have non-competition agreements with high-level employees, but even absent such an agreement, employers may still have recourse against a rogue former executive. Under either scenario, employers should contact a Massachusetts employment attorney to maximize their protection.