Massachusetts
Massachusetts goes further in how it deals with non-compete agreements. Certain professions in Massachusetts are protected from non-competition agreements by state statute or regulation. Specifically, attorneys, physicians, nurses, social workers, and broadcasters cannot be restricted by non-compete agreements.
In an effort to protect certain professions, including Massachusetts’s emerging tech sector, Bay State lawmakers went further in March 2016 by proposing even stricter non-compete laws, including (1) limiting the duration of non-competes; (2) banning non-competes for low-wage workers, interns, employees under the age of 18, and employees terminated without cause; (3) requiring employers to provide prospective employees with notice that a non-compete is required for a position and time to seek legal counsel; and (4) requiring employers to pay a former employee’s pay when the employee is not working because of his or her non-compete. The Massachusetts legislature is currently debating this bill and is expected to vote on it in its next session.
California
California is the most restrictive state regarding non-compete agreements. Non-competes in California are void for employees and independent contractors. Thus employers cannot restrict (1) where an employee works after leaving his or her employment; (2) whether an employee may solicit customers of his or her former employer; and (3) whether an employee may solicit employees that work at his or her former employer. Despite these restrictions on employees and independent contractors, California law allows for a narrow exception. In California, the seller of a business or withdrawing partner of a partnership or member of an LLC can be restricted from starting a similar business in a particular geographic area and soliciting customers of the former business. Thus, California law allows non-competes to protect the goodwill and value of the business the buyer is purchasing or the business the withdrawing partner or member is leaving.
Conclusion
Many states will only enforce non-compete agreements if reasonable but some states—like Massachusetts and California—are more restrictive. Employers and employees should understand the restrictive covenant laws of the state they do business in because the “conventional wisdom” that non-competes can be freely broken is largely false.