{"id":227,"date":"2020-02-26T15:32:14","date_gmt":"2020-02-26T15:32:14","guid":{"rendered":"https:\/\/www.sherin.com\/employment-blog\/?p=227"},"modified":"2021-06-10T16:18:45","modified_gmt":"2021-06-10T16:18:45","slug":"challenging-post-employment-restrictions-new-guidance-from-the-supreme-judicial-court-in-automile-holdings-llc","status":"publish","type":"post","link":"https:\/\/www.sherin.com\/employment-blog\/2020\/02\/26\/challenging-post-employment-restrictions-new-guidance-from-the-supreme-judicial-court-in-automile-holdings-llc\/","title":{"rendered":"Unequal Bargaining Power and Hardship May Make a Post-Employment Restriction Unenforceable: New Guidance from Massachusetts\u2019 Highest Court"},"content":{"rendered":"<p><span style=\"font-weight: 400\">On October 1, 2018, the Massachusetts Non-Competition Act, MGL c. 149, sec. 21, went into effect. Without a doubt, the Act provided a much-needed leveling of the playing field for employees whose employers and prospective employers were using overreaching restrictions to gain an unfair advantage in competition and compensation. For example, the Act prohibits the enforcement of non-competition agreements against employees who are terminated without cause or laid off and, in most circumstances, limits enforceable non-competition restrictions to no more than one year.<\/span><\/p>\n<p><span style=\"font-weight: 400\">However, as Massachusetts employees soon came to realize, the Act is limited to non-competition restrictions and does not cover other anti-competitive restrictions which may be just as harmful. Such restrictions include non-solicitation of customers or co-workers, the latter of which is also known as a \u201cnon-raiding restriction.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400\">On January 14, 2020, in\u00a0<\/span><i><span style=\"font-weight: 400\">Automile Holdings, LLC v. McGovern<\/span><\/i><span style=\"font-weight: 400\">, 483 Mass. 797 (2020), the Supreme Judicial Court, Massachusetts\u2019 highest court, issued a decision regarding such a restriction, which upheld the enforceability of the restriction as one arising in the course of the sale of a business, but rejecting the lower court\u2019s extension of the restriction as an equitable remedy for breach. The Court reminded the lower courts (and employers) that, \u201c[a]s a matter of public policy, we strongly disfavor restrictive covenants.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400\">The Court reiterated the public policy of Massachusetts: \u201cWe have long recognized a public interest in the ability of individuals to be able to carry on their trade freely \u2026 Out of this concern for an individual\u2019s ability to earn a living, covenants restraining competition are only enforceable to the extent that they are reasonable.\u201d The Court reaffirmed that the public policy against anti-competitive restrictions applied not only to those labeled \u201cnon-competes,\u201d and that an anti-competitive restriction \u201cis only reasonable, and thus enforceable, if it is (1) necessary to protect a legitimate business interest, (2) reasonably limited in time and space, and (3) consonant with the public interest.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400\">Regarding whether a restriction is \u201creasonable\u201d and enforceable, the Court pointed out that the context in which the restriction arose \u2013 in employment versus in the sale of a business \u2013 \u201cis relevant to the parties\u2019 relative bargaining power, the hardship to the promisor of abiding by the terms of the restrictive covenant, and thus the overall reasonableness of the restriction.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400\">As the Court noted, \u201csuch post-employment restraints are often the product of unequal bargaining power,\u201d and are entered into without advice of counsel \u2013 all of which the Court considered relevant in evaluating reasonableness and, ultimately, enforceability.<\/span><\/p>\n<p><span style=\"font-weight: 400\">If your post-employment opportunities are limited by a restrictive covenant \u2013 a pre-October 1, 2018, non-compete, non-solicit or non-raiding clause \u2013 you may want to have your rights and options reevaluated by legal counsel in light of this recent Supreme Court decision.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>On October 1, 2018, the Massachusetts Non-Competition Act, MGL c. 149, sec. 21, went into effect. Without a doubt, the Act provided a much-needed leveling of the playing field for employees whose employers and prospective employers were using overreaching restrictions to gain an unfair advantage in competition and compensation. For example, the Act prohibits the [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":143,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[],"tags":[],"class_list":["post-227","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Unequal Bargaining Power and Hardship May Make a Post-Employment Restriction Unenforceable: New Guidance from Massachusetts\u2019 Highest Court - Employment<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.sherin.com\/employment-blog\/2020\/02\/26\/challenging-post-employment-restrictions-new-guidance-from-the-supreme-judicial-court-in-automile-holdings-llc\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Unequal Bargaining Power and Hardship May Make a Post-Employment Restriction Unenforceable: New Guidance from Massachusetts\u2019 Highest Court - Employment\" \/>\n<meta property=\"og:description\" content=\"On October 1, 2018, the Massachusetts Non-Competition Act, MGL c. 149, sec. 21, went into effect. 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