Non-competition Agreements - What Are Employers Really Getting with These Documents?

March 19, 2021
employee sign a non-competition agreement

Everyone is aware of the honeymoon phase of the employment relationship — that time period when the employee begins work and both parties are filled with high expectations for the relationship.


Possibly, prior to beginning the relationship, an employer has the employee sign a non-competition agreement as a sort of prenuptial agreement, hoping to never have to use it. However, fast-forward a few years, the employment relationship goes sour, and the employee leaves the company. Not only does the employee leave the company, but they also begin soliciting clients, or maybe even fellow employees, to join them at their new place of employment.


As employers are aware, Massachusetts enacted the Noncompetition Agreement Act in 2018. Prior to the act, there was little restriction on the contents of a non-competition agreement other than what terms would be enforced by a court in the event of a dispute. That changed with the provisions of the act. Now, in the scenario above, if the employer sought to enforce the non-competition agreement, it would need to pay the former employee not to work during the competition period.

This is because the act mandates that, to be enforceable, a non-competition agreement must contain a ‘garden-leave clause,’ defined as 50% of the employee’s highest annualized salary within the two years preceding termination.


“While the Noncompetition Agreement Act requires employers to pay former employees not to work, there may be other options available to employers.”


Employers therefore must answer the question: what do I really want with a non-competition agreement? Is it to stop the former employee from working? Or is the goal to maintain the status of my business? If the goal is to maintain the status of the business, employers may be able to utilize non-solicitation and non-disclosure agreements, which can protect the former employer’s interests while also allowing the former employee to work.


Both such agreements are excluded from the definition of ‘non-competition agreement’ by the act, meaning they do not need to include garden-leave clauses.


A non-solicitation agreement does not prohibit a former employee from working for a competitor when the employment relationship ends. Instead, it serves to prohibit the former employee from soliciting clients and other employees of the former employer to join them at their new place of employment. A non-solicitation agreement can therefore be an effective tool in preserving the current status of the business by prohibiting a former employee from taking clients and other employees with them to their new place of employment.


A non-disclosure agreement also does not prohibit a former employee from working for a competitor when the employment relationship ends. Nor does it prohibit the former employee from soliciting clients and other employees from joining them at their new place of employment. Instead, it serves to prohibit the former employee from disclosing any confidential information from the former employer. The confidential information protected could be a trade secret or other highly sensitive material.


In short, while the Noncompetition Agreement Act requires employers to pay former employees not to work, there may be other options available to employers. It is therefore wise to consult with employment counsel to review your potential options to protect your business interests after the employment relationship has ended.


Timothy M. Netkovick, Esq. is a litigation attorney who specializes in labor and employment-law matters at the Royal Law Firm LLP, a woman-owned, women-managed corporate law firm certified as a women’s business enterprise with the Massachusetts Supplier Diversity Office, the National Assoc. of Minority and Women Owned Law Firms, and the Women’s Business Enterprise National Council; (413) 586-2288; tnetkovick@theroyallawfirm.com


This article was published in BusinessWest! Click here to visit their website.

April 25, 2025
Case Overview: An Asian-American postal worker, Dawn Lui, allegedly became the target of a racial and gender-based harassment campaign after being assigned to lead a new location in 2014. Lui started working at the United States Postal Service (USPS) in 1992 and was promoted to postmaster in 2004, without issue or complaints. Both Lui and her supervisor agree that the coworkers at her new location called her racially motivated names, created false complaints and racially based rumors like that she couldn’t read or speak English, and created a rumor that she was engaging in a sexual relationship with her supervisor. Lui states that she was interviewed in an internal investigation about the alleged sexual relationship. She believes the allegations were created because the supervisor in question is married to an Asian woman. The supervisor claims that HR disregarded his complaints about racial bias regarding the employee. Where They Went Wrong: HR and labor relations officials proposed a demotion for Lui based off of the contested allegations. The demotion required Lui’s supervisor’s signature to move forward. The supervisor refused to sign the demotion and again brought up his concerns that the allegations were baseless and racially motivated. Because of his refusal to sign the demotion paperwork, he was temporarily removed from his position and replaced. His replacement signed off on the demotion and an investigation was not launched after the supervisor’s refusal. Lui appealed the demotion internally and a “neutral” official started an “independent” investigation. USPS argued that this investigation cleared them of making racial and sex based discriminatory actions. Given the possible racial bias and demotion that occurred in this case, Lui filed suit against USPS alleging disparate treatment, a hostile work environment, and unlawful retaliation under Title VII. After the United States District Court for the District of Washington granted summary judgment to USPS on all of the Plaintiff’s claims, the case was appealed to the United States Court of Appeals for the Ninth Circuit. The Ninth Circuit affirmed the USDC’s granting of summary judgment on the retaliation claim, but they found the USDC erred in their finding that the Plaintiff failed to establish a prima facie case of discrimination when they issued summary judgment on the disparate treatment and hostile work environment claims. The Ninth Circuit found that Lui had been removed from her position and demoted to a smaller location with a pay cut, and she was replaced by a white man with less experience. The Ninth Circuit also found that there was a genuine dispute of material fact regarding whether the decision to demote Lui was independent or influenced by subordinate bias. The official never interviewed witnesses, ignored the reports about racial bias, and solely went off the existing reports used in the original decision. The concerns that the employee’s supervisor raised that the allegations were fabricated and racially motived had not been investigated or addressed. The court ruled that a jury could reasonably find that the “independent” investigation wasn’t truly independent. The Court relied heavily on the Cat’s Paw theory of liability. The Cat’s Paw Theory is an employment discrimination doctrine name after the fable “the Monkey and the Cat” by Jean de La Fontaine. In the fable the cat is enticed by the monkey to retrieve chestnuts from the embers of a fire so they both can share. In the fable the monkey eats the chestnuts while the cat has nothing but burned paws. It came to refer to someone doing dirty work on another’s behalf. It made its way into employment law in Staub v. Proctor Hospital, 562 U.C. 411 (2011). An employer can be held liable for discrimination if the information used in the employment decision was based off a biased supervisor, or other biased employee. Even if the ultimate decision maker was not biased, the information remains tainted. Employer Takeaways: Independent investigations are only independent when an independent investigator re-reviews the information available and interviews witness(es) directly. Having an investigator blindly sign off on an investigation that others allege to be racially motivated without due diligence to verify a lack of bias allows bias to seep into employment decisions. If a separate investigation had been conducted, with fresh interviews from a non-biased 3 rd party, the decision would have been free of the original allegations, and the employer would have avoided liability in subsequent suit. If your business has any questions on this topic or any other matters, please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288.
April 21, 2025
Friday April 18th: Amy Royal, Fred Royal, and Derek Brown attended the Springfield Thunderbirds playoff game! They enjoyed watching the Thunderbirds play the Charlotte Checkers from the Executive Perch.