New, tougher non-compete law goes into effect

Massachusetts now has one of the toughest laws restricting non-compete clauses in work contracts, and it looks as though they’ll be a less common at businesses in the state.

One reason is the so-called “garden leave,” a unique part of the Commonwealth law. If workers sign a non-compete, the employer will have to pay them part of their wages after they leave the job to offset the inconvenience of leaving – and it applies to both employees and contractors.

Some businesses are thinking twice about including non-compete clauses in contracts, as employers must analyze whether it makes sense for them to try and bound employees with restrictive covenants that may not hold up in Court.

Business owners are asking whether the law applies to contracts that were signed before it went into effect on Oct. 1. The answer, he said, is no.

The law was passed in Massachusetts after complaints that non-compete clauses were being overused, making it much harder for people in many fields to find a job after leaving one.

In the new law, an employer who includes a non-compete clause can either pay 50 percent of someone’s wages when they leave the job or a payment described as “mutually agreed-upon consideration.” 

Massachusetts joins just a few other states that limit non-compete clauses. California still has the strictest policy, banning almost all non-compete agreements.

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