By Tim & Anita
We may be lucky to live in California, where the reach of non-compete agreements is fairly limited. The case of Edwards v. Anderson (2008) held that non-competition agreements are void in California with few exceptions. Furthermore, non-compete agreements signed with companies in other states may not be applicable here in the golden state. However, things are a lot different in other states, many of which have significant numbers of scientists, engineers, and knowledge workers.
In the state of Massachusetts, non-compete agreements are generally accepted, and several states (such as Texas, North Carolina, and Pennsylvania) do take a more sympathetic approach towards these agreements. In contrast to California, Massachusetts has a long history of case law in which non-compete agreements have been upheld so long as they are 1) necessary to protect a legitimate business interest, 2) reasonably limited in time and space, and 3) consistent with the public interest. It’s usually wise to read the fine print before signing an agreement, but especially important before signing one with an employer in Massachusetts!
This fall, an IEEE study found that non-compete agreements can push engineers to take jobs in different industries and accept pay cuts after leaving an employer. This continues to be a problematic issue for many workers in the Biotech and IT sectors, especially since most employees are unfamiliar with the laws, and are given the papers to sign along with a host of other documents on the first day at a new job. It may not hurt so much while you’re in the job for which the non-compete was signed, but can have a serious impact if and when you choose to leave that employer.
Some recent news that hits a little closer to home, and tying non-competes together with trade secrets, the Huffington Post recently highlighted Boston Beer’s (maker of Sam Adam’s) suit against Anchor Steam brewery, alleging that Anchor poached an executive with intent to steal trade secrets. The employee in question, Judd Hausner, did sign a non-compete agreeing not to work for any competitor for one year after leaving the firm. Unsurprisingly, the suit was filed in Massachusetts rather than in California. It will be interesting to see how this case turns out, as the law regarding non-compete agreements is so different between these states.
References
http://smallbusiness.jdsupra.com/post/7056691096/texas-non-compete
http://web.mit.edu/newsoffice/2011/non-compete-agreements-1005.html
http://faircompetitionlaw.com/2011/11/19/trade-secret-noncompete-issues-and-cases-in-the-news/
http://www.huffingtonpost.com/2011/11/10/anchor-steam-lawsuit-vs-boston-beer-company_n_1086719.html