Recent activity in the Massachusetts Legislature serves as a reminder that the enforceability of noncompetition agreements nationwide remains fluid and that companies should periodically assess their business protection strategies.

In Massachusetts, hearings were conducted recently on proposed legislation that would dramatically limit noncompetition agreements. This legislation is gaining momentum. Proponents often point to Silicon Valley to say that innovation and economic growth thrive within a legal framework comparable to the proposed legislation. If approved, this would be a dramatic change to the current law where courts in Massachusetts allow noncompetition agreements to be enforced to protect trade secrets, confidential data, or an employer’s good will, provided that they are reasonable in time and geographic area. The proposed legislation also contains certain exceptions that are similar to those found in California. As a result, there would be limited circumstances—just like in California—where noncompetition agreements can be valid and enforceable.

Illinois law already appears to require at least two years of employment or separate consideration to support enforceability.

Georgia provides another example of the ever-shifting legal landscape for noncompetition agreements. Traditionally, Georgia was inhospitable to noncompetition agreements— due to provisions in the Georgia constitution. Recently, there have been various court decisions, a constitutional amendment, and comprehensive statutory reforms that have radically altered the law pertaining to noncompetition agreements so that such agreements, currently, are recognized and enforceable in Georgia.

Companies that have employees in multiple jurisdictions should also be mindful of strategies that can be used by departing employees (e.g., where an action is filed) to invalidate seemingly enforceable noncompetition agreements. Accordingly, businesses may wish to have their noncompetition agreements drafted to be enforceable in multiple jurisdictions. Thoughtful leaders of companies should proactively assess whether current noncompetition agreements are sufficient for desired objectives. In any event, narrow drafting to include only what is essential for business purposes is vitally important.

FisherBroyles has a nation-wide presence, and our partners have expertise in drafting non-competition agreements in the eleven jurisdictions where we have offices and many other states.

If you would like additional information, please contact any of the following FisherBroyles partners:

Atlanta: Carl Johnston

Chicago: Marty Robins

Los Angeles: Steven Papkin

Boston: Peter Cahill

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Founded in 2002, FisherBroyles, LLP is a full-service, cloud-based national law firm with attorneys across the country. Conceived as the “Next Generation Law Firm®”, FisherBroyles eliminates unnecessary overhead and instead offers a more cost-effective solution to clients across all industries. For more information visit our website at www.fisherbroyles.legal.

This newsletter has been prepared for the general information of clients and friends of FisherBroyles. It is not intended to provide legal advice for a specific situation or create an attorney-client relationship. Under rules applicable to the professional conduct of attorneys in various jurisdictions, it may be considered advertising material.