How the Use of Non-competes is Becoming Ever-more Restricted

September 30, 2022

By Alexander Marsh and Jeremy Saint Laurent, Esq.

Historically, non-competition agreements have been a useful tool for employers to protect their businesses, financials, and proprietary information when a departing employee leaves the company to work for a competitor. Over the past decade, the ways in which non-competition agreements can be used has been restricted.


Indeed, Massachusetts has significantly limited the functionality of non-competes, and California has barred them altogether. Recently, the federal government, vis-a-vis the Federal Trade Commission, has limited their use in corporate mergers and acquisitions.


Just four years ago, in October 2018, Massachusetts practically banned non-competes through the creation of very specific and strict requirements. As a threshold matter, non-competes in Massachusetts cannot be freely used and, rather, must protect a legitimate business interest. The definition of legitimate business interest is limited to trade secrets, confidential information of the employer that otherwise does not qualify as a trade secret, or the employer’s good will.


Other alternative restrictive covenant, such as non-solicitation, non-disclosure, and/or confidentiality agreements, must be explored prior to resorting to a non-compete.


Massachusetts further tightened up the ability to implement non-competes by creating a litany of other requirements. The non-compete must:

  • Be in writing;
  • Be signed by both the employer and the employee and state that the employee has a right to consult a lawyer before signing the agreement;
  • Provide notice of the agreement to the employee (the notice requirements change depending on when the employee is asked to sign the agreement); and
  • Occur at the beginning of employment or provide notice of the agreement no less than 10 business days before the agreement would become effective and provide additional compensation.


The conduct the agreement seeks to prevent must not violate the public interest. Generally, public policy favors an employee’s ability to move from one job to another without restriction. Only a narrowly tailored agreement to protect a legitimate business interest will fit within public policy.

It is against public policy in Massachusetts to allow for non-compete agreements in certain professions. Non-competes signed by nurses, physicians, psychologists, social workers, and certain employees of broadcasting companies are considered void in Massachusetts. This is to protect public health and the free flow of information and ideas. A non-compete agreement in any of these areas is unenforceable as a matter of law.


Additionally, a non-compete agreement is not valid against a low-wage employee. The law states that employees who are classified as ‘non-exempt’ (typically, employees eligible for overtime pay and hourly wages) under the federal Fair Labor Standards Act may not be required to sign a non-compete agreement.


Non-competes are also prohibited or unenforceable when an employee is terminated without cause or laid off. These workers are not bound by the terms of any non-compete agreement that they have already signed with their employer.


Now, on the federal side, non-competition agreements are coming under scrutiny through corporate mergers and acquisitions. The primary rationale for restricting them is public-policy concerns.

Traditionally, non-compete agreements as part of a corporate merger or acquisition were quite broad in scope and geography. The reason for their broad coverage makes sense: the sale of a business is primarily based upon good will. Buyers understandably would require broad non-competition coverage so, post-sale, they are not competing against a seller who may start or work for a competitor company. In other words, in a business sale, to protect its interest in the business, the buyer would want to restrict the seller’s ability to compete against it.


However, the Federal Trade Commission recently restricted the ability of a buyer to require broad, sweeping language in non-competes. Rather, they must be limited to what is specifically needed to protect portions of the business.


What does all of this mean for companies? Knowing how to properly craft a valid, legally enforceable non-competition agreement is paramount. As with other restrictive covenants, non-competition agreements should be used sparingly and tailored as narrowly as possible to adequately protect your client’s legitimate business interests without being overly restrictive to the employee.


Generally, a one-year duration is considered to be reasonable. Depending on the circumstances, it may be possible to protect your client with a non-compete that has a shorter enforcement period. Again, as a rule of thumb, the shorter the length of restriction, the more likely the non-compete will be enforceable. It may also make sense to explicitly prohibit competition during employment.


This article was published in BusinessWest.


Jeremy Saint Laurent, 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 that is 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. Alexander Marsh is a legal assistant at the Royal Law Firm LLP.

When Bias Creeps into Independent Investigations It All Becomes Tainted.

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.

Royal Law at Thunderbirds Hockey Playoff Game in the Executive Perch

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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.