Employment Legislation and Regulations

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

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

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!

In our sister blog, Privacy and Security Matters, Cynthia Larose and Brian Lam discuss a new California privacy law passed on June 28, 2018 — the California Consumer Privacy Act of 2018.  The new law creates broad consumer rights regarding their personal information, including a private right of action and statutory penalties.  The law specifically provides protections for “employment-related information.”

Back in July 2016, the Massachusetts legislature passed an Act to Establish Pay Equity (Mass. Gen. Laws c. 149 § 105A, referenced herein as the “Law”), which amends the Massachusetts Equal Pay Act (“MEPA”) and serves to bolster gender-based pay inequity protections provided to employees and to generally address gender pay inequality in the Commonwealth. When the Law goes into effect on July 1, 2018, it will be widely-regarded as one of the most expansive pay equity laws in the United States.

On March 1, 2018, the Massachusetts Attorney General issued long-anticipated guidance on the amendments to MEPA, available here (the “Guidance”), which provides useful information and insight to employers, including several concrete examples and guidelines designed to assist employers in evaluating their existing policies and complying with the updated MEPA.

This post reviews the key provisions of the Law against the backdrop of the new Guidance, and offers strategies and tips to help employers proactively plan for the Law.

Continue Reading Massachusetts Attorney General Issues Guidance on Pay Equity Law

In a March 30, 2018 Bloomberg BNA article, Mintz Levin Employment, Labor and Benefits attorney Gauri Punjabi discusses Massachusetts’ new protections for pregnant workers and compares them with the existing federal requirements. For the full story, click here. This is an important development in Massachusetts, and one that we expect to expand to other jurisdictions. We’ve written on it here and will continue to track its development for our readers.

Join us in a discussion on the increasingly complex landscape of employee misclassification as we explore best practices to help your company avoid the costly pitfalls and time consuming litigation that can result from this expensive mistake.

Continue Reading Mintz Levin 4th Annual Employment Law Summit – The High Cost of Worker Misclassification