Businesses across many different industries use noncompete agreements. These agreements generally prohibit an employee from competing with the employer during and after the employment relationship. Employers also use confidentiality and nonsolicitation agreements to protect against competition from former employees. Over the past several years, however, the law has witnessed a variety of changes to the landscape of restrictive covenants at both the state and federal levels. Increasingly, legislatures and courts have been taking an aggressive approach to limiting the type and scope of restrictive covenants that an employer can use in its relationships with employees.
For instance, noncompete agreements are invalid in California, subject to few exceptions, but they receive more favorable treatment in many other states such as Tennessee. Additionally, Massachusetts recently joined the likes of states such as Utah and Idaho by passing a new law, effective October 1, 2018, which applies to both employees and independent contractors, and generally bans employment-related noncompete agreements in Massachusetts unless they meet certain statutory requirements. Pennsylvania, Vermont, New Jersey, and New York City are not far behind, pushing legislation in 2018 and 2019 that will have the same effect if passed.
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