Imagine that you’re about to begin an exciting new chapter in your career. You’ve paid your dues for years, working long hours at a modest salary, and now you’ve landed your dream job at a new company. You submit your resignation letter to your current employer and you eagerly anticipate day one of the new job.
Before you see your new desk, your old employer marches into court with a “noncompete agreement” that you signed years ago, and the court orders you not to start your new job.
If Massachusetts Governor Deval Patrick has his way, such a scenario could soon become history. The Governor has introduced a bill which, if signed into law after legislative review, would ban certain noncompete agreements.
Although such efforts on Beacon Hill are not new, the media has been abuzz over this development. The Boston Globe recently published an editorial taking aim at noncompetes for “tying [employees] to jobs they dislike, preventing them from launching new ventures, nudging them to seek new positions outside of their area of expertise, or even preventing them from finding new work after they’ve been laid off.” Scott Kirsner, in a Globe column, calls noncompetes “wonderful…for lawyers who earn money from the legal wrangling that results when a worker does depart.”
Colorful language for sure. However, Governor Patrick’s bill has the potential to wipe out decades of case law in which the courts have proven to be capable of reviewing these contracts – without the executive and legislative branch looking over their shoulders.
Mr. Kirsner, in his argument that noncompetes cross the line of reasonableness, points to a court’s decision to enforce a noncompete’s restriction on a hairdresser’s work. Zona Corporation v. McKinnon, Plymouth Superior Court, No. PLCV201100247, March 14, 2011. However, the contract did not impose a blanket restriction on working – it only banned work in seven specifically-named towns. Had the non-compete imposed a larger restriction, such as competing within 100 miles of the salon – the court probably would have went the other way.
Massachusetts courts have long scrutinized noncompetes carefully, as “they are often the product of unequal bargaining power and because the employee is likely to give scant attention to the hardship he may later suffer through the loss of his livelihood.” Sentry Insurance v. Firnstein, 14 Mass.App.Ct. 706, 707 (1982), citing Restatement (Second) of Contracts Section 188 comment g (1981). In Sentry, the judge opined that the employee’s agreement not to sell insurance for two years in Hudson was signed under circumstances amounting to “practical . . . duress.” Id. at 709.
Analysis of non-compete agreements is best conducted on a case-by-case basis, not by imposing categorical bans via legislation. Let’s allow the courts to do their jobs.