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Massachusetts no-compete agreement valid?

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  • Massachusetts no-compete agreement valid?

    I am employed in a full-time retail sales position with a home electronics company that is closing five Massachusetts stores, including mine, next week. Retail salespeople have been offered a severance package of a set amount per week, plus continuation of medical benefits, for a number of weeks equal to each employee's number of years with the company. Part-timers got a similar offer at a lower weekly rate.

    In order to receive the severance, the company is requiring employees to sign a two-year no-compete agreement which prohibits employees from working for any company that competes in any way with the products or services of our current employer.

    Several questions:

    1. How enforceable is a no-compete clause against an employee who has no significant access to any significant trade secrets or similar confidential information? In case it matters, most full-timers make between $20,000 - $30,000 per year.

    2. What companies are considered competing? The employer sells TV's. Are we prohibited from working at Wal-Mart because Wal-Mart sells TV's?

    3. Will we be disqualified from collecting unemployment during the period we are collecting severance? I believe that is the case since the company is calling it a "continuation of pay".

    4. At the end of the "continuation of pay" period, will the amount paid during that time count as pay weeks in figuring our unemployment benefits? For example; if an employee had been regularly earning $450 per week, but only received $350 per week during the severance period, would the weeks at $350 "drag down" the employee's average pay for computing unemployment benefits?

    Any other constructive advice or comments applicable to this situation are welcome.
    Last edited by FormerCSW; 01-27-2006, 10:12 PM.

  • #2
    I am not qualified to answer your questions specifically, especially without being able to see the phrasing in context. We have a MA attorney who posts here - he may have more insights.

    However, I will tell you something that our corporate attorney told me once, which is that it is unlikely that a MA judge will enforce a non-compete agreement of longer than six months. MAYBE a year.

    You might want to have that agreement reviewed by a local attorney.
    The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

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    • #3
      Non-compete clauses in MA have been the subject of a great deal of litigation.

      Although your situation sounds like one where a court would refuse to enforce the non-compete clause, due to: the nature of your work, the amount of consideration paid to you for the restriction, the fact that it may cover too many potential jobs over too long a period of time over too broad a geographical area,....

      Your bigger issue may be that a new employer might be skittish about hiring you and getting into a fight with your former employer - that's if your former employer chose to enforce the clause. That's a big "if". Many employers don't even seek to enforce these clauses. And, many other employers of people in retail sales positions don't care about non-competes and don't even ask prospective employees if any exists.
      This post is by Philip Gordon, a Massachusetts employment attorney (www.gordonllp.com).

      This post is NOT legal advice. It is for general/educational information purposes only. You should not rely on this post if you are making decisions, and it does not create an attorney-client relationship. This post may be considered "advertising" under the MA professional rules for attorneys.

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