Massachusetts Non-Compete Agreements: What Makes One Enforceable

Massachusetts regulates post-employment competition by statute rather than leaving the whole question to individual judges. The rules sit in M.G.L. c. 149, § 24L, added by the 2018 economic development act and applied to agreements entered into on or after October 1, 2018. They are strict about form: an agreement that omits a required sentence or skips a required waiting period fails regardless of how modest its terms look. Non-competes are one piece of the broader framework described in Massachusetts labor laws.

What the statute treats as a non-compete

A noncompetition agreement, in the language of M.G.L. c. 149, § 24L, is an agreement between an employer and an employee, or otherwise arising out of an existing or anticipated employment relationship, under which the employee agrees not to engage in activities competitive with the employer after the employment relationship ends. Forfeiture for competition agreements, which impose adverse financial consequences on a former employee who competes, sit inside the definition and carry the same requirements.

Who counts as an employee is broader here than the word suggests. The section defines an employee by reference to M.G.L. c. 149, § 148B and then says the term also includes independent contractors under that section. A worker engaged on a contract basis is therefore covered by the same conditions, and the classification question runs through the Massachusetts independent contractor law test in § 148B.

Ten categories fall outside the section. The statute excludes covenants not to solicit or hire the employer’s employees; covenants not to solicit or transact business with the employer’s customers, clients or vendors; non-competes made in connection with the sale of a business entity or substantially all of its operating assets; agreements made in connection with separation from employment where the employee is expressly given seven business days to rescind acceptance; forfeiture agreements; nondisclosure and confidentiality agreements; invention assignment agreements; garden leave clauses standing on their own; non-competes agreed to outside an employment relationship; and agreements not to reapply to the same employer after termination.

That exclusion list does a great deal of work in practice. An employer that wants post-employment protection without meeting the conditions in M.G.L. c. 149, § 24L can use a customer non-solicitation clause or a confidentiality clause, neither of which the act reaches. Those clauses are still measured against the common-law reasonableness rules that governed all restrictive covenants before 2018.

The conditions an agreement has to meet

Section 24L reads as a checklist, and an agreement that misses one item is not enforceable as written.

The agreement must be in writing and signed by both the employer and the employee, and it must expressly state that the employee has the right to consult with counsel before signing. Timing is part of the form requirement. An agreement presented at hire must be given to the employee by the earlier of a formal offer of employment or 10 business days before employment begins, under M.G.L. c. 149, § 24L(b).

An agreement signed after work has already started, and not tied to a separation, has two extra burdens. It must be supported by fair and reasonable consideration independent from continued employment, which means continued employment alone is not enough. Notice of the agreement must reach the employee at least 10 business days before it takes effect, and the counsel-rights sentence is required here as well.

Substance follows form. The restriction may be no broader than necessary to protect one or more legitimate business interests, which the statute limits to trade secrets, confidential information that would not otherwise qualify as a trade secret, and employer goodwill. Geographic reach is presumptively reasonable when it covers only the areas where the employee provided services or had a material presence or influence during the last 2 years of employment. The scope of prohibited activities is presumptively reasonable when it is limited to the specific types of services the employee provided at any time during those same last 2 years.

Payment is the requirement that distinguishes Massachusetts from most states. A non-compete must be supported by a garden leave clause or other mutually agreed consideration specified in the agreement itself. To qualify as garden leave, the clause must provide payment during the restricted period on a pro-rata basis of at least 50 percent of the employee’s highest annualized base salary paid by the employer within the 2 years preceding termination, and it cannot let the employer unilaterally stop the payments except where the employee breaches. Finally, the agreement must be consonant with public policy.

Workers a non-compete cannot bind

Four groups are outside the reach of any non-compete under M.G.L. c. 149, § 24L(c): employees classified as nonexempt under the Fair Labor Standards Act, 29 U.S.C. §§ 201–219; undergraduate and graduate students in an internship or other short-term employment while enrolled full-time or part-time; employees terminated without cause or laid off; and employees age 18 or younger.

The termination category is the one that surfaces most often. An employer that lays a worker off cannot then enforce that worker’s non-compete, which removes the restriction from exactly the situation where a departing employee most needs to work. Whether a firing counted as “without cause” often arrives alongside the questions covered in is Massachusetts an at will state. Group terminations bring a second set of obligations, described in the Massachusetts WARN Act notice rules.

Separate statutes bar non-competes in particular professions regardless of § 24L. M.G.L. c. 112, § 12X renders restrictive covenants upon physicians unenforceable, and comparable sections of chapter 112 cover nurses, psychologists and social workers. Chapter 149 contains a parallel bar for broadcasting-industry employees, and the Massachusetts Rules of Professional Conduct restrict them for lawyers.

An unenforceable non-compete does not take the rest of the contract with it. The statute says so directly: the remainder of the agreement containing the invalid non-compete stays in force, so confidentiality, invention assignment and non-solicitation clauses in the same document survive on their own terms.

Reading an agreement against the statute

The statute is written as a sequence, and comparing a document to it works in the same order. Every requirement below comes from M.G.L. c. 149, § 24L.

1. Find the date it was signed

   Only agreements entered into on or after October 1, 2018 are governed by § 24L. Anything older is measured under the common-law test described below, which has no fixed 12-month ceiling and no payment requirement.

2. Look for both signatures and the counsel sentence

   The document needs the employer’s signature as well as the employee’s, plus an express statement of the right to consult counsel. A form signed only by the employee misses a threshold requirement.

3. Trace when it arrived

   Compare the delivery date to the start date. At hire, the agreement had to arrive by the earlier of the formal offer or 10 business days before the first day of work. Mid-employment, it had to arrive at least 10 business days before its effective date and be backed by consideration separate from staying employed.

4. Measure the restricted period

   Count forward from the last day of employment. Anything past 12 months is outside the default limit, and the 2-year maximum applies only in the fiduciary-breach and property-theft situations the statute names.

5. Compare the geography and the activity ban to the actual job

   The presumptions cover areas where the employee worked or had material influence in the final 2 years, and the specific services the employee actually performed then. A clause reaching territories the employee never covered sits outside the presumption.

6. Locate the payment

   Read for a garden leave clause or other agreed consideration named in the document. Garden leave that pays less than 50 percent of the highest annualized base salary from the final 2 years does not meet the statutory definition.

Agreements signed before October 1, 2018

Section 24L is not retroactive, so a non-compete predating the 2018 act that created it is judged under the common-law rule Massachusetts courts had applied for decades: a covenant restricting competition is enforceable if it is necessary to protect a legitimate business interest of the employer, is reasonably limited in time and space, and is consonant with the public interest. Novelty Bias Binding Co. v. Shevrin, 342 Mass. 714 (1961), and All Stainless, Inc. v. Colby, 364 Mass. 773 (1974), state the test; Automile Holdings, LLC v. McGovern, 483 Mass. 797 (2020), applies the same framework to an anti-raiding covenant.

Two features of the older test matter for readers holding a pre-2018 agreement. There is no statutory cap on duration, and there is no payment requirement at all. Protecting an employer against ordinary competition, rather than against use of trade secrets, confidential information or goodwill, has never been a legitimate interest under this line of cases.

Where a non-compete dispute is heard

Civil actions over non-competes subject to § 24L must be brought in the county where the employee resides, or in Suffolk county if the employer and employee agree to it. In a Suffolk county action, the superior court or its business litigation session hears the case.

Employers cannot route around the statute with a choice-of-law clause. Under M.G.L. c. 149, § 24L(e), a provision selecting another state’s law is unenforceable where it would avoid the section’s requirements and the employee has been a Massachusetts resident or worked in Massachusetts for at least 30 days immediately preceding the end of employment.

A court that finds an agreement overbroad is not limited to striking it. The statute preserves judicial authority to reform or otherwise revise a non-compete so that it is valid and enforceable to the extent necessary to protect the legitimate business interests at stake. It also preserves a court’s power to impose a non-competition restriction as a remedy for breach of another agreement or of a statute, which is how trade-secret cases often end. The same 2018 act adopted the Massachusetts version of the Uniform Trade Secrets Act at the sections codified as M.G.L. c. 93, §§ 42–42G, giving employers a separate route against misappropriation that does not depend on a non-compete at all.