The current law in Massachusetts concerning enforcement of noncomps is based upon court cases and not on statute, is confusing and very fact dependent as to which noncompetition covenants will be enforced, and is a constant matter of legal dispute for med-tech companies (and, indeed, for many other companies also).
At a September 16th meeting of MassMEDIC (the association of Massachusetts medical device companies), I had an opportunity to present upon the current status of Massachusetts law concerning noncompetition agreements, which has become an area of great interest since earlier this year, when Governor Patrick proposed a statute which would render all noncompetition agreements unenforceable, except in cases of business acquisitions. His theory was that the elimination of noncompetition agreements would make executives and scientists in technology fields more mobile, thereby driving the Massachusetts economy and encouraging entrepreneurship. Think California (a State which does in fact ban noncompetition agreements).
Three different proposals surfaced in the Massachusetts legislature during the session ended July 31st. None were adopted and they all died. The one that came closest, approved by the Senate but not the House, would have permitted enforcement of some but not all noncompetition agreements. That proposed statute required notice to the employee of right to counsel, gave employees five business days advance notice before being required to sign, required fair consideration to the employee in addition to continued employment, had a ten day cooling off period before the agreement became effective, presumed reasonableness of time for restriction periods of six months or less (the implication being that longer noncompetition covenants would be closely scrutinized), limited the geographic prohibition to areas in which the employee worked (not where the company operated), and could not be imposed upon hourly employees.
After the close of the formal legislative session, and during the informal legislative hiatus period in which we now find ourselves, Governor Patrick refiled legislation in the form of a request that Massachusetts adopt the Uniform Trade Secret Act which, similar to the Bill described above which was passed by the Senate but not the House, would permit noncompetition agreements in limited circumstances.
Prospects for passage of any legislation in the next formal session are unclear. Some of the larger technology companies in the Commonwealth, protecting their work force, are opposed to any such legislation. Not surprisingly, the entrepreneurial community is in favor. Perhaps in the coming gubernatorial campaign, some light will be shed on the issue and perhaps one of the candidates will pick up the cudgel and drive for statutory reform.