Non-competitive agreements protect a company`s sensitive and confidential information, such as IT systems, marketing plans and pricing strategies. These types of agreements can apply to both employees and people close to the company who interact with a company and act on confidential information. Some non-competition prohibitions cannot be upheld in the courts if they are disproportionate in size and duration. New competition bans in other countries are more diverse. Massachusetts and Washington lead the way. The Massachusetts law came into effect on October 1, 2018 and contains new provisions. In particular, the law prohibits employers from requiring non-exempt workers to sign a non-compete agreement, enforcing a non-compete agreement against a dismissed worker without justification, limiting the duration of an enforceable non-competition clause to one year, and providing for the inclusion of a garden holiday clause that provides for the payment of at least 50% of the former worker`s highest salary in the previous two years for the duration of the obligation non-competition. The law also sets out a wide range of procedural standards, such as requirements. B relating to the submission of a non-compete agreement (i) to a potential worker at the time of renewal of an offer or at least ten days before the start of the employment, (ii) signed by both parties and (iii) a language that advises the worker to consult a lawyer before signing. The Washington Act will come into force on January 1, 2020 and contains several interesting features (with the exception of the aforementioned prohibition of non-competition for employees earning less than $100,000 per year).
Like Massachusetts, Washington requires notice of termination, especially the foreign country must be subject to a potential employee before an offer is accepted. The Status of Washington codified the rule established by the jurisprudence that the continuation of employment does not constitute an appropriate consideration of a non-compete agreement. In addition, the Washington law establishes that restrictions of more than 18 months are inappropriate and requires employers to continue to pay basic treatment to a laid-off worker for the duration of a non-compete obligation. Under the new law, a judicial or arbitrary decision that a non-competitive contract, as formulated by a court or arbitrator, is not applicable (even if amended by a court or arbitrator) triggers an arbitral award for actual harm or a legal fine of $5,000.00, depending on the larger value, plus legal fees , reasonable expenses and expenses. It states that massachusetts and Washington laws provide only for non-competition prohibitions, and neither law is intended to limit non-injunctions or confidentiality agreements. In deciding on the appropriate standard to be applied under the rule of reason analysis and application of the 20-year non-compete clause, the court considered the history of that rule under Michigan law. Berg J.A. found that this story had shown that the analysis assumed that a party challenging a restrictive pact should also show that the clause should harm competition in the broader product market.