Page 5 - Rules of the Road-Non Compete Agreements

beginning employment, with no additional benefit offered, courts have sometimes

found those agreements unenforceable for lack of consideration.

Material change in job duties or compensation: if an employee’s duties or

compensation change materially during his or her employment, those changes may

invalidate the original non-compete, if a court determines that there is essentially a

new employment relationship that requires a new non-compete.

Overbroad terms: it might be tempting for an employer to reach as broadly

as possible in defining the post-employment restrictions, but that comes at a risk of

a court finding that it is not necessary to protect a “legitimate business interest.”

For example, restricting an employee from working for a competitor for over two

years, or nationwide when his or her duties were primarily local, would probably

be found overbroad. Similarly, defining “competitor” more broadly than necessary

to protect the employer’s legitimate interest can place the agreement at risk. Note,

however, that in Massachusetts and many other states, a court may simply re-write

the terms of the non-compete to make it enforceable if it finds the agreement to

broad, and then enforce the new, more reasonable terms.

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