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Executive Order on Non-Compete Agreements

Jul 28, 2021
Executive Order on Non-Compete Agreements

On July 9, 2021, President Biden signed an Executive Order aimed at promoting a more competitive marketplace for America workers, businesses, and consumers. In order to promote workers’ ability to switch jobs and negotiate higher wages, the Order encourages the Federal Trade Commission (“FTC”) to restrict the use of non-compete agreements in employment contracts. If the FTC does propose a ban on non-competes, there certainly would be much debate about whether the FTC has the authority to implement such a ban and whether the ban would in fact “promote competition in the American economy.


Currently non-compete agreements are regulated by states, which diverge on whether and to what extent they enforce non-compete agreements. In 2018, the Massachusetts legislature passed the Noncompetition Agreement Act limiting the use of non-compete agreements by providing strict criteria that the agreement must meet in order to be enforceable. The law applies to contracts between employers and independent contractors entered into after October 1, 2018.


The law provides that to be enforceable, a non-compete agreement:


  • must be no broader than necessary to protect employers’ legitimate business interests, which include employers’ trade secrets, employers’ confidential information, or employers’ goodwill with customers;
  • cannot last for more than one year after the end of employment; and
  • must be reasonable with respect to geographic area and activities restricted.


The law also includes a provision requiring non-compete agreements to contain a garden leave clause or some other form of mutually agreed to consideration specified in the agreement. A garden leave clause would require employers to pay employees 50% of their highest salary during the last 2 years, while the non-compete agreement was in effect.


Under the law, non-compete agreements cannot be enforced against (1) non-exempt employees; 2) employees who are terminated without cause or laid off; (3) undergraduate or graduate students engaged in an internship or other short-term employment; and (4) employees aged 18 or younger. Other Massachusetts laws also ban non-compete agreements for physicians, nurses, psychologists, social workers, broadcasters, and lawyers.


For questions about non-competes or any other employment law matter, please contact the attorneys at The Royal Law Firm at (413) 586-2288.

ALERT: EEOC Releases Workplace Guidance to Prevent Harassment

01 May, 2024
On April 29 th , 2024, the U.S. Equal Opportunity Commission (EEOC) finalized their guidance in harassment in the workplace after receiving and responding to nearly 38,000 public comments on the proposed guidance released on October 2, 2023. The renewed guidance provides numerous clarifying hypotheticals, and addresses more recent issues including protections for LGBTIQA+ employees and remote work. Of note, the EEOC clarified the scope of sex discrimination and harassment, stating that federal protections under Title VII extend to LGBTIQA+ employees. Specifically, the EEOC made clear that the scope of harassment extends to repeatedly and intentionally misgendering employees or denying access to bathroom facilities that align with their gender identity. Further, this guidance reminds employers that discrimination and harassment based on “sex” includes harassment based on pregnancy, childbirth and related medical conditions, which include employees’ decisions related to contraception and abortion. Several public comments suggested that these guidelines infringed on free speech and religious rights. The EEOC did not directly address these concerns, instead stating that free speech and religious rights issues are fact-specific and would be addressed on a case-by-case basis. Further, the EEOC updated guidance related to the remote work environment. The EEOC clarified that conduct in a virtual work environment, including electronic communications using private phones, computers, or social media accounts can contribute to a hostile work environment if they impact the workplace. The EEOC also clarified that conduct occurring outside of the workplace, including on social media, which does not target the employer or its employees and is not brought into the workplace generally will not contribute to a hostile work environment. Finally, the EEOC updated its Anti-Harassment Policy Requirements, stating that an anti-harassment and discrimination policy should be widely disseminated to employees, in a manner that is understandable by all employees and includes i) a definition of prohibited conduct, ii) a requirement that supervisors report harassment, iii) multiple avenues for reporting harassment, iv) a statement that clearly identifies accessible points of contact for reporting purposes, and v) an explanation of the complaint process, including adequate anti-retaliation and confidentiality protections, and prompt and effective investigation and corrective action. You can read more about the EEOC's ruling on their website by clicking here . 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.

Non-Compete Agreements Are in Jeopardy

26 Apr, 2024
On April 23, 2024, the Federal Trade Commission (“FTC”) issued a final rule banning non-competition agreements for all employees except for very narrow exceptions. The FTC’s Final Rule banning all non-competition agreements is effective 120 days after its publication in the Federal Register, which is expected in the next few days.  As of the effective date, all non-competition agreements are banned, except for franchisor/franchisee relationships and for sales of a business between buyer and seller. The FTC’s Rule is retroactive, prohibiting certain non-competition agreements before the effective date of the Rule as well. Existing non-competition agreements can remain in effect as to senior executives, which are defined in the Rule as employees in “policy-making positions” making at least $151,164 annually. The FTC’s Final Rule is already being challenged through the court system and a challenge from the Chamber of Commerce will most likely follow suit. Therefore, if an employer has existing non-competition agreements, the employer may not need to rescind them just yet. Stay tuned for updates as these challenges take their due course.
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