As readers of this blog know, I have been tracking restrictive covenant legislation around the country for years. This year, there have been 110 bills in 34 states, with a total of 17 new laws. (Federal developments are coming in a separate post.)
Today’s focus is Massachusetts.
As reported back in January, three bills affecting the Massachusetts Noncompetition Agreement Act (“MNAA”) were pending: one to ban noncompetes altogether, one to prohibit them for certain veterinarians, and one to link “other mutually-agreed upon consideration” to garden leave.
Although all three bills were reported out of committee favorably, they ultimately died.
That would have been the end. But it wasn’t.
A new player entered the fray: Governor Maura Healey.
Her office filed a bill to fundamentally alter the consideration requirements under the Massachusetts Noncompetition Agreement Act (the “MNAA”).
What happened?
On April 16, 2026, Governor Maura Healey’s office filed a bill titled, An Act Relative to Massachusetts Winning Global Investment, Talent, and Innovation (“Mass Wins”). The bill was also accompanied by a summary.
According to the Governor’s cover letter to the Senate and House of Representatives, the bill was designed to ensure that Massachusetts “can support key sectors such as defense, applied AI, robotics, quantum and others.” As Governor Healey quite accurately and appropriately observed in that regard, “Massachusetts is viewed as one of the world’s leading innovation economies and we must continue to welcome opportunity from across the globe.” Accordingly, the letter says that the bill is an attempt to encourage investment in Massachusetts and make it easier to start and grow businesses.
I agree with – and applaud – the Governor’s stated goals. Unfortunately, the proposed changes to the MNAA would, in my view, have undermined those very objectives.
The proposed amendment rested on three flawed premises.
First, it treated the MNAA’s allowance for “other mutually-agreed upon consideration” as a loophole rather than the deliberate legislative compromise that made passage of the statute possible. Second, it assumed that consideration for a noncompete has value only if it is paid during the restricted period – a premise that is inconsistent with both ordinary contract principles and the practical realities of employment relationships. Third, it required the parties to negotiate that consideration at the time of separation, when agreement is least likely.
The history of the MNAA and the operation of the proposed amendments demonstrate why each of those premises is mistaken.
The proposal
The bill sought to revive and expand a provision concerning minimum consideration required for a noncompete that was rejected in 2016. Indeed, that disagreement over consideration was a primary reason the MNAA was not enacted that session. And it was only after that provision was removed that the Legislature ultimately reached agreement.
In that regard, the Wins Act provides as follows:
SECTION 96. Clause (vii) of subsection (b) of section 24L of chapter 149 of the General Laws, as appearing in the 2024 Official Edition, is hereby amended by striking out, in lines 104 to 105, the words “, provided that such consideration is specified in the noncompetition agreement”.
SECTION 97. Said clause (vii) of said subsection (b) of said section 24L of said chapter 149, as so appearing, is hereby further amended by adding the following sentence:-
If the noncompetition agreement is supported by other mutually-agreed upon consideration in lieu of a garden leave clause, then the other mutually-agreed upon consideration must be negotiated in connection with the separation from employment and at least equivalent in value to the garden leave payments otherwise required by this clause.
The cover letter states as follows:
The bill will also benefit workers by closing a loophole in our laws on noncompetition agreements, ensuring workers get fair compensation during the period when they are prohibited from working. Allowing workers to move from one opportunity to another with fewer restrictions—while also allowing employers to enforce non-competes when they need to—isn’t just a matter of basic fairness. It will help Massachusetts retain entrepreneurs who might otherwise start their business in a state where noncompetition agreements are restricted or banned.
That sounds right on its face. But I believe it is the wrong way to address the concerns.
Other mutually agreed upon consideration was a feature, not a bug
The WINS Act proceeds from the premise that allowing a broad range of “other mutually-agreed upon consideration” was a “loophole.” It was not. It was an important compromise that allowed the bill to pass.
In that regard, in July 2016, the legislature was considering two competing bills as the session was ending. The House bill contained the language concerning garden leave or “other mutually-agreed upon consideration” (as ultimately reflected in the MNAA). The Senate bill, however, tied the “other mutually-agreed upon” option to the value of the garden leave (as a minimum), and required (like garden leave payments) that it be paid during the restricted period.
We all know what happened. That session ended, the MNAA died on the hill of consideration, and two years later, the Legislature adopted the MNAA in its current form.
As the history reflects, allowing broad leeway in the use of “other mutually-agreed upon consideration” was not a loophole — it was a hard-fought compromise that allowed the Commonwealth to pass the MNAA.
Consideration for noncompetes can take many forms
The proposal also rests on another common misconception: that consideration for a noncompete has value only if it is paid during the restricted period.
More fundamentally, it is not how contract law works. Parties routinely exchange present consideration for future obligations. Consideration need not be paid when a contractual obligation is performed (or even after the obligation arises) to support that obligation. Signing bonuses, equity grants, promotions, retention awards, and other forms of compensation are frequently provided in exchange, at least in part, for promises that may not be performed until years later. Those promises often include obligations that survive the employment relationship, such as confidentiality, nonsolicitation, no-recruit, and repayment obligations, and, where appropriate, noncompetition covenants. The relevant question is not when the consideration is paid, but whether it was bargained for as part of the parties’ agreement.
Indeed, like the “bundle of sticks” concept in property law, a job consists of various rights and obligations that together define the employment relationship. Employees are entitled to compensation, benefits, a particular role and title, and the freedom to leave their employment, among other things. In return, they agree not only to perform services, but also to comply with a variety of obligations, such as the duty of loyalty during employment and, where appropriate, reasonable post-employment restrictions. A noncompete is simply one of those obligations. Employees are not paid separately for each individual obligation; they are compensated for the employment relationship as a whole.
Before the MNAA, Massachusetts law did not require employers to identify what portion of an employee’s compensation supported each obligation of the employment relationship. Salary, bonuses, benefits, equity, and other compensation supported the job as a whole. The MNAA changed that. Following the MNAA, the agreement had to identify the consideration supporting the noncompete.
In addition, the MNAA required that agreements entered into after employment began needed to be supported by something extra – and not just anything. It needed to be something “fair and reasonable” for the new restriction on post-employment conduct. And, equally importantly, the statute did not attempt to dictate what form that consideration had to take. Instead, what is “fair and reasonable” is determined by the facts, not by some arbitrary, pre-determined amount applicable to every employee in the Commonwealth who might agree to a noncompete, regardless of role or compensation.
Employees frequently receive signing bonuses, equity grants, retention awards, promotions, specialized training, and other valuable benefits in exchange, at least in part, for agreeing to a noncompete. Particularly for startups and emerging companies, those forms of consideration are often both more practical and more valuable than garden leave.
The same is true if part of an employee’s ongoing compensation reflects the value of the noncompete. Assume, for purposes of illustration, that ten percent of an employee’s annual compensation reflects the value the parties attribute to the noncompete. Unlike garden leave (which is paid only if the employer elects to enforce the restriction), the employee receives the benefit every year, whether or not the noncompete is ever enforced. Over time, the employee may receive far more than the value of garden leave, while retaining the benefit even if the noncompete is never invoked.
Negotiation at the conclusion of employment is a fiction
The proposed changes to the MNAA also suffered from a significant procedural problem: it requires that anything other than garden leave must be negotiated in connection with the separation. While in theory that’s a great idea, in practice there would rarely be agreement at the time of separation.
Before turning to the problem, recall that the MNAA requires that the noncompete cannot be provided without specific advance notice. In that regard, a well-regarded study found that employees “who learn of their noncompete before they accept their job offer . . . have 9.7% . . . higher earnings . . . relative to those employees without a non-compete.” (Interestingly, the “wage premium” diminished with greater enforceability of noncompetes, other benefits did not.)
Further, part of the reason for requiring notice of the noncompete along with a job offer is to enable employees to know that a noncompete is required and then decide if the totality of what is being offered is worth it. And, as suggested by some existing research (if you believe the research in this area), notice leads to higher wages. Regardless, at a minimum, notice allows employees to potentially negotiate the package, or, even if not, they can certainly turn down a job requiring a noncompete if the package isn’t worth it.
Requiring the parties to negotiate “other mutually-agreed upon consideration” only at the end of the employment relationship ignores the practical realities of employee departures. By the time the employee has given notice of their intention to leave, the parties’ interests typically diverge, and negotiations are often impossible or complicated by changes of circumstances (e.g., the employee has already accepted a new job or is subject to a short deadline to do so), distrust, anger, and the prospect of litigation. As a practical matter, the vast majority of employers and employees will not reach agreement under those circumstances.
Employers now frequently provide equity, options, long-term incentive compensation, and other forward-looking benefits in exchange, at least in part, for noncompetes. Had the proposal been adopted, the likely result would not have been greater compensation for employees. Rather, employers would have shifted away from those flexible compensation arrangements, reducing opportunities for employees to receive more valuable forms of compensation while simultaneously reducing the protections that the Legislature deliberately preserved in the MNAA.
The WINS Act loses
The WINS Act would have fundamentally altered a hard-fought, carefully designed consideration paradigm.
The first public hearing on the bill took place on May 19, 2026, before the Joint Committee on Economic Development and Emerging Technologies. Not surprisingly, I submitted oral testimony (at 1:18:42-1:24:50) and written testimony opposing the proposed changes to the MNAA.
Following that hearing, the WINS Act was reported favorably out of committee — but without the proposed change to the MNAA.
Not so fast
If you thought the removal of the language by the Joint Committee on Economic Development and Emerging Technologies ended the debate (as I did), you would be wrong. It did not end there.
Although the WINS Act — without the MNAA language — was subsequently under consideration by the Senate, there was a proposed amendment (Amendment 383) to add the MNAA language back in.
That proposed amendment was, however, ultimately withdrawn on July 24, 2026.
While you’re at it (better ways to improve the MNAA)
As I explained in my written testimony, the MNAA can be improved on. The following are a few examples:
- Authorize courts to impose financial penalties for objectively unreasonable, overly broad noncompetes and bad-faith enforcement efforts.
- Clarify that “springing noncompetes” must be stated expressly in the agreement. The MNAA currently permits courts, in appropriate circumstances, to impose a noncompete as a remedy for violations of other restrictive covenants or obligations where the employer chose to rely initially on narrower protections, such as nonsolicitation, no-recruit, or confidentiality agreements. This approach encourages reduced reliance on noncompetes while recognizing that violations of those narrower restrictions may not be discovered until substantial harm has occurred. Requiring disclosure of that possibility in the agreement would enhance transparency without materially altering the statute’s existing balance.
- Clarify that the employer-signature requirement is intended to ensure an enforceable agreement, including where consideration may involve equity or compensation provided through a parent or affiliated entity. This is an ambiguity in the MNAA currently pending before the Supreme Judicial Court. These types of targeted reforms would improve clarity and reduce abuse without materially altering the balance established by the MNAA.
- Clarify that providing garden leave relieves the employer from other obligations under the MNAA, leaving the common law to apply.
Takeaway
The effort to eliminate the flexibility of “other mutually-agreed upon consideration” failed — for now. Whether that issue returns next session or in some other form remains to be seen. What should not be forgotten, however, is why that flexibility exists in the first place. It was not an oversight or a loophole. It was a deliberate legislative compromise that made the MNAA possible.
In that regard, regular readers of this blog know that I have never been a noncompete fanboy. In a perfect world, we would not need them and not have them. Of course, this is not a perfect world. Noncompetes are, unfortunately, necessary in certain circumstances. If you are an employee thinking of leaving your job, you have the ability to limit the likely enforcement of a noncompete against you. This video provides some guidance on how to limit the chances of a noncompete being enforced against you: The Exit Plan: Being a Good Leaver.