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Can I require employees to sign non-compete agreements in Massachusetts? What are the requirements?

Non-Compete Agreements in Massachusetts

Non-compete agreements are enforceable in Massachusetts, but there are certain requirements that must be met [1.1].

Requirements

  1. Consideration: The employer must provide the employee with consideration, such as a job offer or a promotion, in exchange for signing the non-compete agreement.
  2. Duration: The duration of the non-compete agreement must be reasonable. In Massachusetts, non-compete agreements are generally limited to one year.
  3. Geographic Scope: The geographic scope of the non-compete agreement must be reasonable. It should be limited to the geographic areas where the employer does business or where the employee worked.
  4. Legitimate Business Interest: The non-compete agreement must protect a legitimate business interest of the employer, such as trade secrets or confidential information.
  5. Notice: The employer must provide the employee with notice of the non-compete agreement before or at the time of the job offer or acceptance.
  6. Garden Leave: If the employer wishes to enforce a non-compete agreement, it must pay the employee during the restricted period, unless the employee breaches the agreement. This is known as “garden leave.”

Exceptions

There are certain exceptions to the non-compete agreement requirements in Massachusetts. For example, non-compete agreements are not enforceable against certain types of employees, such as those who are terminated without cause or laid off [1.1].

Record-keeping Requirements

PEOs in Massachusetts are required to maintain certain records and materials related to their clients and covered employees [1.2]. These records include names, phone numbers, email addresses, and mailing addresses of clients and covered employees, PEO agreements, documents related to the commencement, termination, or administration of PEO services rendered, client records provided to the PEO for the administration of PEO services, and financial records relating to a PEO agreement, PEO services, or a PEO relationship. PEOs must retain these records for three years after the termination of the PEO agreement or the three years after the termination of the covered employee’s employment with the client, whichever occurs first. However, in any cause of action brought by an employee where the PEO has been notified thereof in any administrative or judicial proceeding, including but not limited to, the Massachusetts Office of Affirmative Action, the Massachusetts Commission Against Discrimination, Massachusetts Civil Service Commission, Massachusetts Labor Relations Commission, Attorney General, or a court of appropriate jurisdiction, such PEO shall retain records required to be kept under 454 CMR 30.13(2) that are relevant to such action until the final disposition thereof.

Application Requirements for PEOs

PEOs in Massachusetts are required to submit an application for PEO registration, pay the required registration fee, and provide all required information on a form prescribed by the director [1.3]. Applicants must submit information such as the name or names under which the PEO conducts business or will conduct business, the address of the principal place of business of the PEO and the address of each office it maintains in the Commonwealth, a statement of ownership, a financial statement setting forth the financial condition of the PEO or PEO group, a list of clients, and a copy of the registrant’s standard comprehensive PEO agreement. PEOs must also maintain positive working capital necessary to meet its financial obligations to provide professional employer services and submit a surety bond in the amount of $250,000 payable to “The people of the Commonwealth.”

Source(s):
Jurisdiction

Massachusetts