From Lexology, Dawn Mertineit and Anne V. Dunne discuss a recent Massachusetts case in which suggests that the new Massachusetts Noncompetition Agreement Act (“MNCA”) does not require agreements to include a choice of law provision or a “garden leave” provision (a provision that requires the employee to be paid during a notice period during which the employee is not paid and permitted to tend to his/her garden) . Dawn and Anne write:
Similarly, and perhaps more interestingly, the court held that Day’s argument regarding Massachusetts’ alleged policy against foreign choice-of-law provisions was unavailing, and not just because Day entered into his agreement prior to October 2018. The court held that even if the agreement had been entered into post-October 2018, the application of Delaware law would not have had “the effect of avoiding the requirements” of the MNCA: Day’s agreement was in compliance with the MNCA, notwithstanding the Delaware choice of law, as it was in writing, supported by separate consideration, expressly stated that Day could consult counsel, and did not exceed 12 months from the cessation of employment. And critically, while the court noted that the agreement lacked a “garden leave” provision, it held that its absence was not determinative because the agreement was supported by other mutually agreed-upon consideration, which is a permissible alternative under the MNCA.
This decision is of particular note to practitioners closely watching how courts will analyze a Massachusetts resident’s non-compete agreement entered into after the effective date of the MNCA. Specifically, this decision signals that agreements need not include a Massachusetts choice-of-law provision, and agreements containing extraterritorial choice-of-law provisions will survive scrutiny under the MNCA, so long as they otherwise comport with Massachusetts law. And it confirms that as we have advised our readers, contrary to some sensationalist pieces that came out in the immediate aftermath of the law’s passage, garden leave is not required under the MNCA for a non-compete to be enforceable.