Consideration under the New Massachusetts Noncompete Law: Compromise Happens

It’s just over a year since the “new” Massachusetts Noncompetition Agreement Act took effect, and it already has had some very tangible, positive effects. However, one aspect of the new law — namely, what consideration is required to support a noncompete — continues to create significant uncertainty.

In short, while the new “fair and reasonable consideration” standard is required for a noncompete entered into during employment, something short of that — perhaps precisely what was required before the law became effective — is all that is required for a noncompete entered at commencement of employment.

Such an interpretation is consistent with Nuvasive, Inc. v. Day, 2019 WL2287709, at *4 (D. Mass. May 29, 2019) (Casper, J.), the first reported decision to provide any guidance on this issue. In particular, in that decision, Judge Casper notes that the following statement in a noncompete would be sufficient under the new law:  “In consideration of my engagement by the Company, the compensation I . . . receive from the Company (including for example monetary compensation, Company goodwill, confidential information, restricted stock units and/or specialized training) . . . .”

For a more detailed discussion of consideration under the new law, see The new noncompete law: compromise happens (an article written by Erika Hahn and me, published this week in Massachusetts Lawyers Weekly).