Non-compete reform has come to Massachusetts, with wide-ranging legal and practical implications for any employers with workers in Massachusetts. Employers have just six weeks to consider and adopt a new approach to non-compete agreements for their workforces. The new law, which becomes effective on October 1, 2018, comes after many years of debate and dramatically shifts the restrictive covenant legal landscape in the Commonwealth.

While employers will still be able to utilize non-compete agreements for most workers, the law necessitates a new approach to drafting, implementing, and enforcing these agreements. This post summarizes the new law, identifies employer action items, and raises several issues that will emanate from this reform.

Brief Summary of the New Law:

The key takeaways of the law are as follows:

  • Non-compete agreements will be more expensive to utilize. Employers must offer the employee paid “garden leave” for the length of the restricted period of at least 50% of the employee’s highest base salary during the prior two (2) years (or some “other mutually-agreed upon consideration,” which the agreement must specify);
  • Employers cannot require all employees to sign non-compete agreements. The law prohibits employers from requiring certain categories of workers, including non-exempt employees, to enter into non-compete agreements;
  • Non-compete agreements may be void depending on the reason for separation. Employers cannot enforce non-compete restrictions against employees who have been terminated without cause or laid off, except when included as part of a separation agreement;
  • The new law only applies to agreements entered into on or after October 1, 2018. Older agreements are not voided, but employers should consider revisiting the current agreements in place. We address this issue further below;
  • Continued employment is no longer sufficient consideration. Employers must provide fair and reasonable consideration to support non-compete agreements signed after employment has commenced;
  • The non-compete agreement must be reasonably tailored. A non-compete agreement must: (i) be limited to a maximum one (1) year non-compete period (subject to a limited exception discussed further below); (ii) protect statutorily covered employer interests (i.e. trade secrets); and (iii) cover a geographical scope that is reasonable in relation to the employer’s protectable interests;
  • The new law applies to employees and independent contractors alike. The new law specifically defines employee to include contractors and will also require employers to retool those agreements to the extent they include non-compete provisions; and
  • The law does not apply to all agreements with restrictive covenants. The law does not cover non-solicitation agreements, non-disclosure agreements, and separation agreements (among others discussed below), which means that these agreements will continue to be analyzed under the common law, but now against the backdrop of the new public policy on non-compete restrictions.

Taken together, while many of the law’s provisions reflect best practices for enforceable non-compete agreements, several of the requirements – particularly around the requisite consideration supporting non-compete agreements – will now require employers to evaluate their overall non-compete strategy, update their non-compete agreements, and adjust their human resources processes to ensure compliance with the law.

Below we explore the law in greater detail and highlight the practical and legal implications for employers.

Continue Reading New Massachusetts Non-Compete Law Goes Into Effect October 1, 2018

We want to dedicate our August Bubbler feature to our readers, who have helped Mintz’s blog achieve such an august reputation. This month’s namesake (Emperor Caesar Augustus) would have been proud to see all of the activity out of the Empire State recently, as New York City’s Office of Labor Policy & Standards recently released guidance on the new Temporary Schedule Change Law. The schedule change law was one of a number of laws passed in New York recently aimed at accommodating employees’ personal obligations and improving work-life balance. The newly-released guidance is likely to intensify employer concerns, but with the law now in effect employers must work (once again) to update their policies, procedures and practices.

Continue Reading The Bubbler – August 2018

Employers in Massachusetts are watching closely as a non-compete bill was recently passed by the Legislature and is now on Governor Baker’s desk. Currently slated to take effect on October 1, 2018, the law will significantly impact the drafting, implementation and enforcement of non-compete agreements in the Commonwealth. Governor Baker is expected to sign the bill into law, but before doing so, he may amend and send the bill back to the Legislature to be voted on again.

Continue Reading Massachusetts Non-Compete Legislation Awaiting Governor Baker’s Signature

The Office of Labor Policy & Standards, the office responsible for enforcing NYC’s employment laws, recently released guidance on the new Temporary Schedule Change Law. The law, which took effect on July 18, 2018, was passed with little fanfare, but left employers asking many questions about how to effectively implement its requirements. In particular, employers were left scratching their heads over the law’s “shoot first, ask questions later” procedural requirements and an employee’s nearly unhindered ability to disrupt their operations at a moment’s notice.

The law also came on the heels of the passage of several other New York State and New York City laws aimed at accommodating employees’ personal obligations and improving work-life balance, including laws providing for paid sick and safe leave, paid family leave, fair workweek and scheduling requirements, protection against caregiver and familial discrimination, and the requirement to accommodate pregnancies, disabilities and other personal obligations. The newly-released guidance is likely to intensify employer concerns, but with the law now in effect employers must work (once again) to update their policies, procedures and practices as necessary not only to comply with its requirements, but to minimize disruption to their operations.

Continue Reading Guidance on NYC Temporary Schedule Change Law Released

Earlier this month, Governor Jerry Brown signed A.B. 2282 into law, clarifying several unanswered questions concerning California’s salary history ban.

Continue Reading California Clarifies its Salary History Ban

California Governor Jerry Brown recently signed into law A.B. 2770, creating new protections for employers, witnesses, and complainants from defamation lawsuits related to making, assisting, or discussing good-faith sexual harassment claims and investigations.  Effective January 1, 2019, the bill amends California Civil Code section 47, which designates certain communications as “privileged” for purposes of defending defamation claims.  A “privileged” designation means a defendant accused of making a defamatory statement about a plaintiff may assert the privilege as a bar to liability.

Continue Reading New California Law Extends Defamation Privilege to Communications Related to Sexual Harassment Claims and Investigations

In a series of blog posts going back to last August, we reported on certain amendments to the Massachusetts Employer Medical Assistance Contribution (EMAC) rules. As we previously explained, the EMAC contributions are required of employers with more than five employees in Massachusetts. Last year’s amendments increased the basic EMAC annual fee to $77 per employee from $51 per employee and added a new, supplemental penalty of up to $750 for each non-disabled worker who receives health insurance coverage through MassHealth or who opts out of employer-provided coverage and instead receives subsidized coverage from the Massachusetts Health Connector (i.e., the Commonwealth’s Affordable Care Act marketplace). While the EMAC penalties seemed relatively innocuous when viewed in isolation, the actual amounts of the supplemental payments turned out in many cases to be substantial. Small employers are being particularly hard hit.

Continue Reading Massachusetts Legislature Proposes Limited Relief for Employer Medical Assistance Contribution (EMAC) Supplemental Payments

 

This is the first post in a blog series exploring the U.S. Department of Labor’s recently issued final regulation governing Association Health Plans (AHPs). While AHPs can be either fully-insured or self-funded, the final regulation provides rules that are generally more useful to the former than the latter. Because of the preemptive force of ERISA, fully-insured arrangements are more lightly regulated under state law than their self-funded counterparts. This post addresses the question of what certification is needed, if any, to establish that an AHP is fully-insured.

Continue Reading Association Health Plan Perspectives (Part 1): Determining the Status of an AHP as “Fully-Insured”

Our colleague Alden Bianchi was a guest on a recent episode of Bloomberg Tax’s “Talking Tax” podcast, discussing the U.S. Department of Labor’s new rules for Association Health Plans, which change the standards for determining which small employers are permitted to band together to form, maintain, and participate in single, large group health plans.  Click here to listen, and stay tuned for Alden’s upcoming blog series on this topic!

 

Welcome to July! As we head deeper into the summer, the employment law world continues to heat up (and we’re not just talking about the record temperatures across the country!). We have rounded up the most recent developments impacting employers here:

The U.S. Supreme Court closed out an epic 2017 term (pun slightly intended) with the issuance of Epic Systems Corp. v. Lewis, in which it held that contractual waivers of class arbitration in employment agreements are enforceable. Our colleague Gil Samberg also wrote about the decision over on our sister blog, ADR: Advice from the Trenches. The Court also handed down a significant decision in Janus v. AFSCME, holding that public employees who are not union members cannot be required to pay agency fees to a union even if that union represents them for purposes of collective bargaining. Last but certainly not least, Justice Anthony Kennedy announced his retirement from the bench, effective July 31.

At the state level, both New York and Maryland have recently enacted sweeping legislation in response to the #MeToo movement, which we wrote about here and here. New York employers must ensure that their employment agreements are in compliance with the new law by July 11, 2018. On the heels of the New York Paid Family Leave law, which took effect on January 1, 2018, Massachusetts Governor Charlie Baker just signed into law a new paid family and medical leave program that is even more generous than the New York law. That law also increases the state minimum wage and eliminates premium pay for Sundays and certain holidays. We outline the parameters of the new law here.

In New York City, the bill requiring employers to grant two temporary schedule changes per year takes effect on July 18th. Finally, in response to the bevy of leave laws that have recently been passed throughout the country, we will be debuting a new blog series addressing issues arising from and relating to leaves of absence. The series will include posts on navigating the ADA, performance and benefits issues for employees on leave, and the interplay between federal and state-specific leave laws. Stay tuned for more and as always, do not hesitate to contact your Mintz Levin ELB team with any questions about compliance with these laws.

Wishing our readers a happy and restful 4th of July!!