Enforcement of non-competition agreements: developments in Massachusetts.

Publication: Employee Relations Law Journal

Publication Date: 22-SEP-04

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COPYRIGHT 2004 Aspen Publishers, Inc.

Restrictive covenants continue to be a valid too/for protecting good will and confidential business information. However, complex legal principles can be invoked to limit the enforceability of agreements that do not thoughtfully apply these principles to the reality of the employment relationship. As the authors explain, maximizing protection requires careful drafting, making sure that the agreement is tailored to the facts and circumstances of the particular employment relationship, and making informed judgments as to when and how to revise these agreements based on changing circumstances.

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Two recent cases illustrate the difficulties that can arise when attempting to enforce non-competition agreements in Massachusetts. These cases serve as a reminder to employers that maximum protection comes from carefully drafted agreements that consider judicial trends as well as the particular circumstances of the employee's responsibilities.

In Cypress Group, Inc. v. Stride & Associates, an IT placement firm, sought a preliminary injunction enforcing non-competition agreements against two former employees. (1) A Massachusetts Superior Court judge denied Stride's request. The court's denial was based on several grounds, including: a lack of evidence that the former employees had developed dose relationships with customers and therefore were it] a position to take their former employer's good will with them. the "arbitrariness" of the contracts' geographic scope and the fact that the employees were assigned to different positions after they signed the agreements. The judge's decision includes a controversial and arguably overbroad assertion that "each time an employee's employment relationship with the employer changes materially, such that they have entered into a new employment relationship, a new restrictive covenant must be signed." (2)

In another recent case involving a placement finn, Oxford Global Resources v. Guerriero, the District Court for the District of Massachusetts partially granted the company's motion to enjoin former employees from soliciting certain of its clients after thoroughly analyzing what, if any, company good will and confidential information was at risk if the agreements were not enforced. (3)

GENERAL PRINCIPLES

Non-competition agreements are enforceable in Massachusetts provided the following elements are met:

1. The...

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