He added that Massachusetts is losing talent to California, which already severely limits enforceability of noncompete agreements:
Non-competes stifle movement and inhibit competition and we do not want that. The evidence is clear-we are not seeing the kind of spin-offs and start-ups at the same rate that previously made Massachusetts an enviable model. Individual career growth is good for the Commonwealth: We encourage our talent to be creative, to be innovative, and to network with other talented people. Furthermore, we encourage employers to recruit talented people. However, we send a mixed message: providing the talent needed to support the kind of explosive growth we want in the innovation economy is considerably more difficult if employees are legally unable to move between jobs in the innovation economy.
By far the most common question I get in my law practice is, "How do I get out of my noncompete agreement?" I wish I had a magic wand to make non-competition restrictions go away for employees once they leave their employer, but there's no easy way out of these agreements. Assuming you don't live in California or Massachusetts (if they do pass such a law), there are still some ways to overcome noncompete agreements.
If Massachusetts is not able to create an environment that gives entrepreneurial talent a chance to thrive, then the most effective job creating companies may be pushed to grow to scale in states like California. In fact, we have heard examples of entrepreneurs at MIT who were advised to start their businesses outside of Massachusetts as a result of non-compete agreement laws. Non-competes stifle movement and inhibit competition and we do not want that. The evidence is clear-we are not seeing the kind of spin-offs and start-ups at the same rate that previously made Massachusetts an enviable model.
Here are the top 7 ways to overcome non-competition restrictions in your employment agreement:
- No legitimate interest to protect: The state laws allowing certain non-competition provisions in contracts are an exception to antitrust laws, which prohibit agreements that limit competition. If the only reason your employer has for the noncompete agreement is to prevent competition, that's an antitrust violation and it is illegal. They must have a legitimate interest to protect, such as trade secrets.
- Publicly available information: If the information the employer claims they are trying to protect is available to the public, they'll have a hard time proving they have a legitimate interest in protecting the information if you want to work for a competitor. Examples of ways information may be publicly available include lists available for purchase, searchable databases that anyone can pay to access, phone books (does anyone have them anymore?), search engines, and subscriber services.
- Employer breaches: If the contract also says the employer has to pay you certain wages, benefits or bonuses, lists your job duties or contains other employer obligations and the employer changes them or doesn't comply, then their breach may be a defense to enforcement of the noncompete agreement.
- Employer doesn't keep the information confidential: I've seen employers wrongfully try to claim their customers were secret when they proudly announced them on their web page, literally broadcast their customer names, or got them through bidding. If the information is really a trade secret, then the employer will have to prove they've taken steps to protect the information.
- Customer follows: It varies from state to state, but in some states a customer can voluntarily follow you to your new job as long as you don't solicit them to do so. If you send an email blast to all your customers when you leave, that may be a solicitation. But if the customer says that they are going to cease doing business with your former employer no matter what, it will be difficult for a court to rule that the company has a legitimate interest in keeping them from following you.
- Unclean hands: Most times, an employer who seeks to enforce non-competition restrictions will ask the judge to enter an injunction to stop you from working. An injunction is a kind of court order that is part of the court's equitable powers. In order to seek relief in equity, the employer must have "clean hands," meaning they didn't do anything wrong. If you left due to discrimination, illegal activities of the employer, or were retaliated against for taking Family and Medical Leave, you may convince a judge that your former employer has unclean hands and isn't entitled to an injunction.
- No damages: If the former employer sues you for money damages, they must be able to prove that any damages they seek were caused by your violation of the noncompete. This is more difficult than you might think. They'd need to show that, but for your violation, the customer would have given the business to them instead of you. If the customer testifies that they were unhappy or just went with the lowest bid, then damages will be impossible to prove.
If you need legal advice, it's best to talk to an employment lawyer in your state, but if you have general legal issues you want me to discuss publicly here, whether about discrimination, working conditions, employment contracts, medical leave, or other employment law issues, you can ask me at AOL Jobs. While I can't answer every question here, your question might be featured in one of my columns, or in our upcoming live video chat.