In Part I of Key Changes to Massachusetts Noncompetes, I outlined some of the most significant new mandates that will apply to all noncompete agreements executed on or after October 1. In this post, I want to discuss some of the practical implications of the new law and how in-house counsel might address them.
- The new law does not apply to covenants not to solicit customers, clients, or vendors of the employer
While this may not sound like a significant exception, in many instances, it provides the ultimate loophole. For example, if your company uses noncompetes primarily or exclusively to prevent your sales force from competing against you, simply revising those agreements so that they are structured as nonsolicitation agreements may give you most, if not all, of the functional protections of a noncompete – but without having to worry about any of the requirements of the new law.
- Noncompete agreements entered at the outset of employment only are valid if they are provided to the employee by the earlier of a formal offer of employment or 10 business days prior to the commencement of employment
In light of this, it is critical that in-house counsel … Keep reading
Over the years, I have written blog posts related to a plethora of nuances concerning noncompetition agreements. While the signing into law last Friday of new legislation on noncompetes does not eviscerate them (despite advocacy on the part of some for such a result), there are a number of new mandates that significantly change the legal landscape – but only for noncompete agreements entered into on or after October 1, 2018. Here are what I believe to be the most significant changes to Massachusetts noncompete law:
I. The definition of noncompetes does NOT include, and the new law will NOT apply to:
- A. Covenants not to solicit or transact business with customers, clients, or vendors of the employer
- B. Noncompetes in the context of the sale of a business or substantial assets thereof, when the individual is a “significant” equity holder and will receive “significant” consideration for the transaction
- C. Noncompetes in connection with a separation agreement, if the employee is given seven days to rescind the agreement
- D. Covenants not to solicit or hire employees of the employer
II. To be valid, a noncompete MUST meet ALL of the following conditions:
- A. The noncompetition period may
… Keep reading
As I noted in a prior post, the differences between arbitration and litigation go well beyond the fact that arbitration generally is a quicker and less expensive process. As such, there are a host of reasons why a company may want certain disputes – including, but not limited to, those brought by its own employees – resolved through arbitration. Similarly, companies almost always want to avoid the risk of being sued in a class action. Recently, the U.S. Supreme Court, in its consolidated decision in Epic Systems Corp. v. Lewis; Ernst & Young LLP v. Morris; and NLRB v. Murphy Oil USA, Inc., ruled that class action waivers are enforceable.
As Justice Gorsuch noted at the outset, while the three consolidated cases had different facts, they each essentially revolved around the same related questions:
Should employees and employers be allowed to agree that any disputes between them will be resolved through one-on-one arbitration? Or should employees always be permitted to bring their claims in class or collective actions, no matter what they agreed with their employers?
In the Ernst & Young case, Stephen Morris entered into an employment agreement with E&Y, stating that (i) all … Keep reading
We all learned pretty early on in law school that for a contract to be formed, there has to be an offer and acceptance. We also were taught that if, in responding to an offer, a party accepted some terms and proposed additional ones, that party was making a counter-offer, was deemed to have rejected the original offer, and no contract was formed. In the real world, it usually is clear whether an offer is being accepted or a counter-offer is being made. Nevertheless, and as the defendant in APB Realty, Inc. v. Georgia-Pacific LLC recently learned, a lack of precision in responding to an offer can lead to confusion as to whether or not a contract has been formed.
In APB Realty, Georgia-Pacific was offering 88 rails cares for sale, “where is, as is.” APB was interested in buying those rails cars, and it made the following offer to Georgia-Pacific’s broker:
Total for all 88 x Log Stake Railcars $1,636,000 (Including 16% Buyer’s Premium).
Shortly thereafter, the broker responded as follows:
Here are the two options that [Georgia-Pacific] has brought back for us to close the deal on.
Option 1, basically states that for $61K, you
… Keep reading
The Americans With Disabilities Act prohibits discrimination “on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.” Over the past few years, innumerable lawsuits have been brought against universities, banks, and businesses, claiming that they have engaged in unlawful discrimination under the ADA because their websites (1) act as “places of public accommodation,” and (2) are not fully accessible to people with visual impairments. (Often, these lawsuits concern the fact that, although a visually impaired person can use a “screen-reader” to convert text on a website into audio, if there is no subtitle to a non-text picture or image, that user would have no way of knowing that a picture or image exists, let alone what it might be.)
While there have been cases holding that websites are not places of public accommodation, the trend seems to be otherwise. Some jurisdictions hold that a website may be a place of public accommodation if there is a connection between the site and a physical location. See, … Keep reading
As I discussed in a 2015 blog post, the language in a forum selection clause is critical if you want to ensure that potential litigation takes place on your “home court.” Indeed, as the defendants in Genis v. Campbell recently learned, having a less than all-encompassing and precise forum selection clause can lead to unintended results.
Alfred Genis is a Massachusetts resident and a diamond laboratory scientist. In 2013, Genis met Martin Campbell, who, along with his brother, David, owned Pure Crystal, a company involved in growing laboratory diamonds. In October of that year, the three individuals executed what would later be referred to as the “October 2013 Agreement.” That Agreement indicated that Genis would be granted 25% equity in Pure Crystal and also would receive equity in two new companies to be formed. In that same month, the Campbell brothers formed the first of those companies, Kimberlite Applied Science, LLC, and Genis executed an “Employment Agreement” and a “License Agreement” with Kimberlite.
By 2017, the relationship between Genis and the Campbells had broken down, and Genis filed suit in Massachusetts Superior Court, alleging that his intellectual property had been misappropriated and that he had not been granted … Keep reading
The Act to Establish Pay Equity, amending G.L. c.149, §105A (MA Pay Equity Law), goes into effect July 1, 2018. All employers, regardless of number of employees, whose employees perform all or the greater part of their work in Massachusetts, are required to comply with the MA Pay Equity Law.
One of the law’s notable aspects is that a potential employer cannot ask a job candidate what his/her prior salary history is. Many employers regularly ask job candidates what they make as a way of gauging whether they can meet the compensation expectations of a job candidate or, in some cases, trying to determine the least amount of pay to offer. In this day of networking, management-level employees may also receive job inquiries from potential candidates, and it is not uncommon for managers to ask, “How much are you making now?” as a threshold question, to determine whether the inquiry is worth passing on. Unfortunately, if such benign questions are asked, the candidate may bring a legal claim for violating the MA Pay Equity Law.
With such a low threshold to assert a legal claim, what should you do? First, make sure all employees know that, under no … Keep reading
Effective April 1, 2018, for employers with six or more employees, Massachusetts’ prohibitions on discrimination in the workplace have been expanded to prohibit discrimination on the basis of pregnancy and pregnancy-related conditions. The Pregnant Workers’ Fairness Act specifically makes it unlawful to discriminate against an employee based on lactation or the need to express breast milk for a nursing child. Further, if an employee requests an accommodation for pregnancy or a pregnancy-related condition, an employer will be required to engage in a timely, good faith, “interactive process” to determine an effective, reasonable accommodation that enables the employee to be able to perform the essential functions of her position, just as an employer is required to do for an employee with a disability.
Reasonable accommodations under the new law include:
- more frequent or longer paid or unpaid breaks;
- time off to attend to a pregnancy complication or recover from childbirth;
- acquisition or modification of equipment or seating;
- temporary transfer to a less strenuous or hazardous position;
- job restructuring;
- light duty;
- private non-bathroom space for expressing breast milk;
- assistance with manual labor; and
- a modified work schedule.
Although employers are allowed to seek medical verification for certain types of accommodations, medical … Keep reading
It is not unusual for business people and/or in-house counsel to consult with accountants or other non-party experts when contemplating a potential business transaction. As the defendants in The C Company, Inc. v. Hackel recently learned, however, trying to protect such communications from disclosure based on the attorney-client privilege can be difficult, if not impossible.
In The C Company, attorney Todd Goldberg represented Michael Hackel and Dining-In, Inc. in connection with a 2008 transaction with The C Company and Nicholas Cercone. During negotiations, an employee of The C Company emailed a draft agreement to the company’s outside accountant, and asked him to evaluate the tax implications of the contemplated transaction. The accountant provided that advice, after which Attorney Goldberg and the accountant exchanged their own emails so that Attorney Goldberg could better understand the accountant’s viewpoint. After litigation related to the transaction was filed by The C Company and Cercone, they sought to discover all of the foregoing communications, and the defendants took the position that such communications were protected by the attorney-client privilege. In analyzing the matter, the Superior Court Judge began by stating that:
Massachusetts recognized the so-called “derivative” attorney-client privilege. Under this doctrine, the attorney-client
… Keep reading
Massachusetts employers will soon see the impact of House Bill 3822, signed last year by Governor Charlie Baker. In an effort to offset the significant shift from commercial to publicly subsidized health care coverage, in 2018 and 2019, there will be an increase in the existing Employer Medical Assistance Contribution, as well as a new supplemental fee for employers whose non-disabled employees either receive coverage through the Massachusetts Division of Medical Assistance (MassHealth) or have their coverage subsidized by the Massachusetts Health Insurance Connector Authority (ConnectorCare).
Beginning in the first quarter of 2018, all employers will likely see an increase in their existing EMAC, assessed through the Department of Unemployment Assistance. The increase is intended to be temporary and applicable to wages paid in calendar year 2018.
Additionally, employers with more than five employees who are non-disabled and receive health care coverage through MassHealth or receive subsidized care through ConnectorCare for a period of at least 56 continuous days, will be assessed a supplemental fee of up to 5% of a covered employee’s unemployment insurance taxable wages (up to a cap of $750 per covered employee). The assessment will be based on wages on record with the DUA for … Keep reading