Tag Archives: Massachusetts

Non-Compete Reform Comes to Massachusetts

By Strang Scott on August 30, 2018

After years of trying to find common ground on non-compete reform, the Massachusetts legislature passed a bill – which Governor Charlie Baker signed into law on August 10, 2018 – that promises to significantly change the employment landscape in the Commonwealth. The new law will take effect on October 1, 2018.

The following is a brief, non-exhaustive overview of some of the law’s most notable features:

The law defines a non-competition agreement as an “agreement between an employer and an employee, or otherwise arising out of an existing or anticipated employment relationship, under which the employee or expected employee agrees that the employee will not engage in certain specified activities competitive with the employee’s employer after the employment relationship has ended,” but excludes certain agreements from its purview, including: (1) non-compete agreements made in connection with the sale of a business; (2) non-compete agreements made in connection with the cessation or separation of employment (provided the employee is given seven business days to rescind acceptance); (3) employee non-solicitation covenants; (4) customer/client/vendor non-solicitation covenants; and (5) non-disclosure of confidential information agreements.

Both traditional employees and independent contractors are covered under the law.

All agreements must be in writing and signed by both parties, and must expressly affirm an employee’s right to consult with counsel before signing.

If a non-compete agreement is signed at the beginning of an employment relationship, it must be given to the employee when the employment offer is made or 10 days before the commencement of employment, whichever is earlier. Agreements signed after the commencement of employment must be “supported by fair and reasonable consideration independent from the continuation of employment.”

The law requires so-called “garden leave pay” or some “other mutually agreed-upon consideration.” Garden leave pay refers to an agreement in which the employer, during the course of the restricted period, continues to pay the former employee at least 50 percent of the “highest annualized base salary” that employee received within the two years preceding his or her termination. The law does not further define or elaborate upon what “other consideration” might be acceptable in lieu of garden leave pay, however. In addition, it remains to be seen whether garden leave pay constitutes sufficient consideration for those non-competes executed after the commencement of an employment relationship, or whether some consideration above and beyond the garden leave pay is required in those circumstances.

Agreements not to compete must be “reasonable.” They can be no broader than necessary to protect a legitimate business interest; they cannot exceed one year in duration; their geographic scope must be reasonable; and they must otherwise be reasonable “in the scope of proscribed activities in relation to the interests protected.”

Non-compete agreements may not be enforced against non-exempt employees; undergraduate or graduate students engaged in short-term employment; employees who have been terminated without cause or laid off; or employees who are 18 years old or younger.

These new requirements apply only to non-compete agreements entered into on or after October 1, 2018. Nevertheless, employers may wish to revise existing non-compete agreements for current employees in order to avoid disparities amongst employees, as well as potential future litigation.

Show Me the (Same Amount of) Money!

By Strang Scott on June 21, 2018

The state’s new pay equity law, which amends the Massachusetts Equal Pay Act (“MEPA”), will take effect on July 1, 2018. It is one of the strongest pay equity laws in the country, and subjects employers to double damages and attorneys’ fees in the event of a violation. Moreover, it is a “strict liability” statute. Thus, whether or not an employer intends to discriminate against employees of one gender is “irrelevant” to the analysis.

The amendments prohibit employers from, among other things:

• Paying different wages to people of different genders who perform “comparable work,” unless the difference in salary is attributable to one (or more) of six enumerated statutory factors;

• Asking job applicants about their wage or salary history;

• Decreasing the wages of an employee solely to close the wage gap;

• Retaliating against employees for exercising their rights under MEPA.

The revisions also establish a safe harbor provision for employers who perform self-evaluations of their pay practices.

What Does “Comparable Work” Mean?

MEPA defines “comparable work” as work that “requires substantially similar skill, effort, and responsibility” that is performed under similar working conditions. Employers should not assume that a job title, or even a job description, necessarily determines comparability. In fact, employees need not even be in the same business unit or department in order have “comparable” jobs. Notably, this is a broader definition than the “equal work” standard under federal law.

Even if employees are in comparable roles, however, employers are permitted to pay them different salaries if the difference is based on of one (or more) of the following factors:

• A seniority system (as long as seniority is not affected by pregnancy, parental or family leave);
• A merit system;
• A system that measures earnings by quantity or quality of production, sales, or revenue;
• The geographic location in which a job is performed;
• Education, training, or experience, as long as these factors are reasonably related to the job in question; and
• Travel that is a regular and necessary part of the job.

What Employers Should Know About the Safe Harbor Provision

In order to trigger the safe harbor provision, which establishes an affirmative defense against liability for claims of pay discrimination, an employer must have conducted a “reasonable and good faith” pay audit within the previous three years (and before an employee files an action), and must demonstrate that it is making “reasonable progress” towards eliminating wage differentials across genders.

Self-evaluations not only help employers identify and rectify wage gaps, they guard against liquidated damages in the event of a judgment against the employer, even if the evaluation was not “reasonable” in detail and scope.

Guidance for Employers

The Massachusetts Attorney General’s Office has issued a Guidance that addresses the amendments. While the Guidance does not have legal force, it is a useful compliance tool and a good place to start if you have basic questions about how to ensure you are compensating your employees equally across genders for “comparable work.” However, employers should bear in mind that “the complexity of the analysis required will vary significantly depending on the size, make-up, and resources of each employer”; the Guidance does not, and cannot, address the many fact-specific situations that may arise at any given place of employment.

In addition to the Guidance, the AG’s Office has generated a “Pay Calculation Tool” to help employers identify and evaluate gender-based pay gaps. Smaller employers with clearly defined groupings of comparable jobs and relatively simply pay structures may benefit from using the tool, at least as a first step; it is not appropriate for large pay groups or complicated pay structures. Furthermore, the data the tool generates may be discoverable in litigation or government investigations, so employers should consult with counsel before conducting any self-evaluation.

“Ban-the-Box” Update for Employers

By Strang Scott on May 21, 2018

Since 2010, employers in Massachusetts have been prohibited, under the Criminal Offender Record Information (“CORI”) Reform Act, from requiring a job applicant to check a box indicating that he or she has a criminal history (the “ban-the-box” law). Employers are also prohibited from requiring applicants and employees to disclose certain criminal information, including arrests and criminal cases that did not result in a conviction; first convictions for various misdemeanor offenses; misdemeanor convictions where the date of conviction or release from incarceration occurred five or more years prior to the date of the employment application (in the absence of an intervening conviction); juvenile records; and sealed criminal records.

Under new amendments to the CORI Reform Act signed by Governor Baker on April 13, 2018, and slated to take effect on October 13, 2018, employers may not inquire into misdemeanor convictions where the date of the conviction occurred three or more years from the date of the application (unless there was an intervening conviction). In addition, employers may not ask applicants about “a criminal record, or anything related to a criminal record, that has been sealed or expunged . . . .” Finally, employers must include the following statement on any application “which seeks information concerning prior arrests or conviction of the applicant”: “An applicant for employment with a record expunged pursuant to section 100F, section 100G, section 100H or section 100K of chapter 276 of the General Laws may answer ‘no record’ with respect to an inquiry herein relative to prior arrests, criminal court appearances or convictions. An applicant for employment with a record expunged pursuant to section 100F, section 100G, section 100H or section 100K of chapter 276 of the General Laws may answer ‘no record’ to an inquiry herein relative to prior arrests, criminal court appearances, juvenile court appearances, adjudications or convictions.”

Employers are advised to take note of these important changes and revise their applications, and application processes, accordingly.

Massachusetts Pregnant Workers Fairness Act Takes Effect

By Strang Scott on April 25, 2018

As of April 1, 2018, all Massachusetts employers with six (6) or more employees are subject to the state’s new Pregnant Workers Fairness Act (the “Act”).

In light of the pre-existing federal law in this area, what is most notable about the Act is that it requires covered employers to provide:

• non-exempt and exempt employees with reasonable breaks and an appropriately private place to express breast milk;
• written notice to their employees regarding the rights provided under the Act; and
• reasonable accommodation(s) to employees on the basis of pregnancy and pregnancy-related conditions.

Reasonable accommodations may include thing like frequent or longer breaks, light duty, or a modified work schedule.

It is unlawful to retaliate against employees for requesting such an accommodation. Likewise, employers cannot deny an employment opportunity to an employee if the denial is based on the employer’s knowledge that it would have to provide the employee a reasonable accommodation, nor can an employer refuse to hire someone on the basis of pregnancy or a pregnancy-related condition, provided that person can perform the job (with a reasonable accommodation, if necessary).

Employers must provide the required written notice in a handbook, pamphlet, or other appropriate form to:

• current employees on or before the effective date of the Act;
• a newly-hired employee at the time of his or her hire; and
• any employee who notifies the employer of a pregnancy or a pregnancy-related condition, within 10 days of such notice.

Employers may satisfy the written notice requirement using the two-page Pregnant Workers Fairness Act Guidance published in part for this purpose by the Massachusetts Commission Against Discrimination (MCAD). The MCAD has also published a helpful Q&A regarding the Act. Should you have questions concerning compliance with the Act or other matters, speak with an experienced employment attorney.

Christopher Strang’s Article Published on the Cover of Under Construction

By Strang Scott on March 26, 2018

Strang Scott partner, Chris Strang, co-authored and article with Brendan Carter from the Associated General Contractors of Massachusetts that was published recently on the cover of the American Bar Association’s “Under Construction” quarterly newsletter. The article details a case where Strang Scott prevailed against the Commonwealth of Massachusetts, successfully arguing that the awarding authority has a duty to ensure the validity of payment bonds provided by general contractors on public construction projects in Massachusetts. The case was a matter of first impression in Massachusetts courts.

Promise to Pay Doesn’t Change Mechanic’s Lien Deadline

By Chris Strang on February 20, 2018

In a recent decision, D5 Iron Works, Inc. v. Danvers Fish & Game Club, Inc., & Others, the Appeals Court of Massachusetts ruled that an owner’s promise to make payment to the subcontractor did not excuse the subcontractor’s failure to timely file suit.

In the case, the general contractor was delinquent in paying the subcontractor. The subcontractor timely filed a Notice of Contract as well as a Statement of Account . Nevertheless, Massachusetts lien law requires that a lawsuit be filed within 90 days of filing the Statement of Account.

According to the Subcontractor, the project owner represented that the subcontractor would be paid. The subcontractor testified that it relied on that representation in not timely filing the lawsuit.

Consistent with its prior decisions, the court ruled that mechanic’s lien statutory deadlines are to be strictly enforced, and denied the subcontractor’s claims.* This case stands as a fresh reminder that the statutory deadlines for mechanic’s lien filings are enforced strictly, and not generally subject to extension or modification by private agreement. Contractors and subcontractors should take care to observe deadlines ardently in order to avoid losing their mechanic’s lien rights.

*At the time of this article, it remains unclear whether either party will appeal the decision, which went unpublished.

Selecting the Right Home Improvement Contractor in Massachusetts

By Chris Strang on August 14, 2017

Selecting a contractor for a home improvement project is both exciting and fraught with peril. The right one can deliver your dream home, and the wrong one can make your living space a nightmare for an extended period of time. Fortunately, Massachusetts maintains strong consumer protections against the latter in M.G.L. c. 142A, the Home Improvement Contractor statute.

Contractors are required by law to include specific provisions and notices in contracts with consumers. Homeowners should thoroughly investigate the contractor up front and be well-versed in their rights.

Construction consumers should consider some practical tips is selecting their residential construction or home improvement contractor:

(1) Do thorough research and get multiple quotes. Many websites provide reviews and commentary on contractors from prior customers, such as yelp and angies’s list.

(2) Make sure the contractor you choose is registered as a Massachusetts home improvement contractor;

(3) Verify that the construction supervisor the company plans to use to oversee the project day-to-day has a valid construction supervisor’s license; and

(4) Insist upon a complete written contract, signed by both parties, prior to making any deposits or starting any work. At a minimum, your contract should include the following information:

a physical address for the contractor, not just a post office box, along with the name of the salesperson and the construction supervisor for your project;

a start date and a completion date for work, so that you don’t find yourself lower on the contractor’s priority list than other projects soon after making your deposit;

a clear scope of work, including as much detail as possible. If you’ve agreed upon certain brands for hardware or fixtures, be sure those brands appear in the contract; and

specific benchmarks for making progress payments, including the amount for each such payment.

Do not make final payment to your contractor until all of the work is completed to your satisfaction. Be sure to ask for a copy of the contractor’s insurance policy and call the insurance company to verify that it is current.

For substantial projects, have a qualified construction lawyer review your contract prior to signing it. A small investment with a construction attorney can save thousands of dollars and immense frustration by avoiding traps for the unwary hidden in contract documents and by adding appropriate layers of protection into your contract that homeowners are not likely to add on their own.

Want Out? Prove It: Enforcing Termination Options in Massachusetts Commercial Leases

By Strang Scott on May 22, 2017

A recent Massachusetts Appeals Court decision made clear that the burden of proof relative to the operation of lease option clauses falls on the party seeking to exercise the option regardless of which party moves to enforce their rights pursuant to the lease. In Patriot Power, LLC v. New Rounder, LLC, et al. (2016), a commercial landlord initiated an action for declaratory judgment and breach of contract against a tenant alleging that the tenant did not properly exercise its contract option to terminate its tenancy.

At trial, the jury was instructed that the landlord bore the burden of proof relative to the claim that the tenant had not properly exercised the lease termination option. The landlord objected to the instruction and subsequently lost the case. On appeal, the court sided with the landlord and reversed the ruling on the grounds that the jury instruction regarding the burden of proof was erroneous and prejudicial.

The court held that the fact that the landlord initiated the action for declaratory relief did not shift the burden to the landlord on the underlying action. The court cited a line of cases supporting the proposition that, “one relying on a condition to avoid contractual obligation has the burden to prove the occurrence of the condition.” A proposition made stronger when the facts are such that, “the contractual obligation actually requires an affirmative act by the party seeking to end the obligation.”

As applied to the facts in Patriot Power it is clear that the tenant bore the burden of proof. The lease termination option required the tenant to mail timely notice of such termination in order to relieve the tenant of further contractual obligation. Thus, the tenant needed to prove it had, in fact, complied with the terms of the lease rather than the landlord needing to prove non-compliance. Lease termination option clauses are common in many Massachusetts commercial leases. Both commercial landlords and tenants should read their leases carefully in order to fully understand the obligations and provisions contained within.

Show Me the Money: When Payment is Due on Massachusetts Public Construction Projects

By Andrea Jacobs on April 5, 2017

Traditionally, general contractors on Massachusetts state-level public construction projects employed one of two types of risk allocation provisions in payment clauses in their subcontracts with subcontractors: a “pay-if-paid” or a “paid-when-paid” clause. This changed, however, due to a 2004 Massachusetts court decision that largely did away with condition precedent payment clauses commonly referred to as “pay-if-paid” clauses. While the differences between the two clauses may not jump off the page, the use of one rather than the other had a significant impact on a subcontractor’s right to collect payment from the general contractor.

“Pay-if-paid” clauses create a condition precedent to payment. That is, a subcontractor has no right to be paid for completed work until or unless the general contractor received payment from the owner. “Pay-when-paid” clauses create no such condition precedent to subcontractor payment. Rather, a “pay-when-paid” clause is a timing provision; that is, the general contractor has a ‘reasonable time’ to obtain payment from the project owner, but in the event the owner does not pay the general contractor within a ‘reasonable time’ the subcontractor retains the right to collect payment from the general contractor for its work. Ambiguous contract language often complicated the subtle, yet substantial, difference between the two types of clauses, leading to high stakes contract interpretation disputes.

In 2004, Massachusetts did away with the distinction between “pay-if-paid” and “pay-when-paid” clauses on state-level public construction projects. In, Framingham Heavy Equip. Co., Inc. v. John T. Callahan & Sons, Inc., 807 N.E.2d 851, 855 (Mass. App. 2004), the court reasoned, that absent express contract language, if “payment to the subcontractor is to be directly contingent upon the receipt by the general contractor of payment from the owner,” then the default interpretation of subcontract payment provisions, “should be viewed ‘only as postponing payment by the general contractor for a reasonable time after requisition … so as to afford the general contractor an opportunity to obtain funds from the owner.’” This decision virtually eliminated “pay-if-paid” in favor of “paid-when-paid” clauses on Massachusetts state-level construction projects.

While the holding in Framingham is generally good news for payment-seeking subcontractors, the issue remains, however, as to what a “reasonable time,” is to afford general contractors before general contractors must make payment to subcontractors should the owner not pay. In Framingham, the court determined that where the payment issues originated in December 1998 and continued through March 1999, that by the end of April 1999, “the general contractor had exceeded any reasonable period of time,” and thus the subcontractor’s claim for payment for completed work could not be defeated even though the owner had yet to pay the general contractor for the subcontractor’s work.

There has been no subsequent case in Massachusetts that further defines the “reasonable time” standard to determine when general contractors must pay subcontractors when the general contractor objects to making payment as a result of a “pay-when-paid” clause. Thus, subcontractors should be keenly aware of any developments in the law regarding what constitutes “reasonable time” for payment in connection with these provisions. If you have questions regarding payment issues on state-level public construction projects you should contact a Massachusetts construction lawyer.

Strang, Scott honored in 2016 Edition of Super Lawyers

By Strang Scott on October 20, 2016

Strang Scott is honored to announce the selection of Christopher Strang as a 2016 Super Lawyer and Jordan Scott as a 2016 Rising Star by the Massachusetts edition of Super Lawyers. Mr. Strang has been recognized for his outstanding work in construction litigation for the eighth consecutive year, first as a Rising Star and then as a Super Lawyer, while Mr. Scott has earned his second consecutive recognition for his employment practice. The Super Lawyers selection team chooses only 5% of eligible attorneys as Super Lawyers, and only 2.5% of eligible attorneys as Rising Stars. Both lists are the result of a process that includes a statewide lawyer survey, independent research, and peer reviews.