Drafting and Enforcing Massachusetts Non-Competition Agreements

Careful Drafting of Non-Competition and Confidentiality Agreements is Important to Enforcement and Requires Attention to Details and Knowledge of the Law

Though Massachusetts courts enforce non-competition agreements, doing so can be difficult. Obtaining a court order that bars a former worker from taking to a competitor both his services and his former employer’s business secrets is rarely a sure thing. To be enforceable, non-competition agreements must be carefully drafted, properly executed, and tailored to protect only legitimate business interests.

The process is critical to many businesses. Nowadays, retaining qualified and productive workers can be difficult as employees shop for work in a marketplace where competitors are sometimes all-too-eager to oblige them. Defining competitive borders is increasingly difficult as technology expands marketplaces. Meanwhile, a company’s trade data can now fit onto a compact disc or be transmitted across the globe with the push of a button. In this climate, employees can quickly become former employees with the skills and data needed to do real damage to their former companies. Effective safeguards against this threat are often needed to prevent damage to a company’s profitability and competitiveness.

Protecting business interests like these requires attention in several areas. Before a company drafts and implements a non-competition agreement strategy, it should ensure that it protects its secrets through a strong organizational scheme that limits employee access and tracks where and how its private data is used. Businesses should understand the types of information they must safeguard and be certain they know precisely how and by whom the data is stored and used. Common items meriting protection are customer lists; formulas; purchase and sales histories; pricing material; business plans; and market strategies, to name a few. If one or more of these items fall into the hands of a competitor, the damage can be severe. With strong organization, only those who need trade data to perform their duties will have access to it and risks will be minimized.

Within this protective framework, a strong technology use policy should be in force. A good policy makes clear that all information on company databases belongs to the company alone and that no employee can keep personal or private information on a computer system. This will allow close monitoring of computer use and a quick shut down/confiscation of data when necessary. Technology policies should define proper and improper employee conduct. They should inform workers that the company will monitor technology use and review everything from private electronic mail to daily web surfing. Technology policies should include a warning that any violation could lead to severe discipline that includes termination from employment.

Employees in key positions and/or those with access to secret trade material should be required to sign non-competition agreements that include confidentiality language. Restrictions on future work should be carefully worded so that employees are restricted only insofar as necessary to protect the company. Among the key issues at any enforcement proceeding in court will be defining the legitimate business interests that merit protection. It’s not enough that a contract is fair, reasonable, and fully signed by all concerned. To block a former employee from working for the competition in Massachusetts, a business must demonstrate how it will be irreparably damaged by the employee’s conduct. Before a decision is made to run to court for an enforcement order, then, employers should think through the legal process carefully and seek guidance from qualified counsel.

Indeed, protective steps that begin well before an employee bolts for the competition are far more effective than reactionary ones that begin by questioning whether a court injunction can be obtained. Companies that know their trade secret data, protect it through effective policies and strong contractual arrangements, and then monitor their processes stand the best chance of avoiding the cost and uncertainty that inevitably accompanies any courtroom fight. Policies should be reviewed regularly to keep them current. Non-competition/confidentiality agreements with workers should be signed anew whenever a job change or pay raise is implemented. It’s also wise to establish an exit interview process to help monitor what departing employees possess and ensure that all is accounted for before they leave the company.

By Attorney Jack K. Merrill - Framingham, MA Employment Lawyer

Attorney Jack K. Merrill is a Massachusetts employment lawyer and specializes in employment law and civil litigation. He counsels small businesses and individuals on discrimination cases and other employment related legal matters. 

With law offices in Framingham, MA and Milford, MA, our employment law lawyers provide legal services to individuals and businesses throughout the Boston metro west and Worcester county region including Ashland, Dedham, Framingham, Franklin, Hopkinton, Maynard, Marlborough, Milford, Natick, Needham, Newton, Shrewsbury, Sudbury, Waltham, and Worcester, Massachusetts.