Dangerous Things: What They Don't Want You to Know

 

Part One in a series of posts about product defects by SLN partner Andrew Nebenzahl

 

Every day, consumers use dozens of products, trusting that they are safe and will function as they are supposed to. Often they do. But sometimes the products have a hidden, dangerous defect that cause serious injuries or death.  And sometimes manufacturers keep those dangerous defects secret from consumers until long after these injuries have occurred. Recent media coverage of several consumer product defects, such as exploding air bags or failed ignition switches in cars, has exposed a breakdown in the system tasked with safeguarding people and keeping dangerous products off the market. This is the first in a series of posts aimed at providing you with information on defects you may not be aware of.

The spotlight has recently been aimed at several massive cover-ups. In the world of automobile defects, we learned that General Motors kept an ignition switch defect—which turned the engine off, leaving drivers without power steering, power brakes, and airbags—secret for 13 years, causing possibly hundreds of deaths and more than a thousand injuries.  Exploding Takata airbags that could hurl metal shards at vehicle occupants after even a minor accident also made international news. Again, Honda Motor Corp. and the airbag manufacturer, Takata, knew of this undisclosed defect for years before they took steps to recall the vehicles. And Trinity Industries, which makes many of the guardrails lining our nation’s highways, came under fire for changing the size of the end cap at the end of the rail without telling federal regulators. It turned out the new design allowed the guardrail to impale a vehicle and its occupants and was almost four times more likely to be involved in a fatal crash than its predecessor.

The roadways are not the only place where defects can lurk—some of the products in your own home may be dangerous without you realizing it. Many electronic toys, flash lights, watches, and car key fobs on which we rely every day run on button cell batteries. Although the nickel-sized lithium batteries look innocuous, they are extremely harmful if a child swallows one and it gets lodged in the throat or esophagus. More than 3,000 children visit emergency rooms annually for injuries such as airway obstruction, esophagus perforation, vocal cord paralysis, and gastrointestinal bleeding. Children are also in danger if they swallow one of the high-powered, ball-shaped magnets found in toys, science kits, and desk games like Buckyballs. When multiple magnets are swallowed, they attract each other, pinching the intestinal wall between them, causing holes in intestinal tissues and stomach linings. Even your appliances may not be safe—refrigerators, dishwashers, dehumidifiers, and other appliances have all been recalled for defective wiring that caused fires.

Most consumers never know that products used everyday are subject to a recall and could be dangerous for themselves or their children. Manufacturers know that the number of people who return their products in a recall is low and that many stores, including major retailers, will continue to sell them long after a recall has been issued.  We will continue to update this series from time to time to keep consumers informed about dangerous products and "what they don't want you to know." In the meantime, you can always check the updated list of recalls at the Consumer Product Safety Commission website here:  http://www.cpsc.gov/en/Recalls/

Can My Boss Do That? Employer Deductions from Commissions Under Massachusetts Law

For many workers, commissions form a significant part of their compensation.  Commission agreements can be complex, and employers often draft them to include offsets for certain expenses in the calculation of the final commission due.   Can they do this?  The answer is not entirely clear, but a recent Massachusetts Superior Court decision suggests that employers should use caution, and employees paid on a commission basis should be watchful and review their commission plans carefully to be sure that there are no inappropriate deductions.

The Massachusetts Wage Act requires timely payment of wages and commissions, and has been interpreted to prohibit deductions from the wages of hourly or salaried employees unless they are a valid set-off under Massachusetts law.  This means if you are an hourly or salaried employee, your employer may deduct things like medical and dental insurance premiums, taxes, and court approved garnishments, but cannot deduct expenses associated with your work.

It has been  less clear how the prohibition against deductions applies to deductions from commissions.  It is not an uncommon practice for employers to include certain costs in the calculation of commissions, many of which are really a means of transferring the employer’s overhead expenses.  For example, a commission formula for a salesperson may include deductions for expenses associated with the sale.

The Massachusetts Wage Act explicitly includes commissions within its scope, and states that it is applicable: “…when the amount of such commissions, less allowable or authorized deductions, has been definitely determined and has become due…”  M.G.L. ch. 149, § 148.  Until recently, there has been no guidance in the Massachusetts case law about the meaning of “allowable or authorized deductions."

Smith Lee Nebenzahl represents a hair stylist whose compensation was based on a percentage of the revenue from the clients she serviced.  The salon applied a “product deduction” of $2.00 for each client serviced, purportedly to cover the cost of the shampoo, conditioner, or other product used, which was deducted after the calculation of the commission.  The crux of our argument was that an employer should not be able to do to a commissioned employee what it cannot do to an hourly or salaried employee- namely, to transfer a portion of the employer’s overhead expense to the employee.

The salon moved for summary judgment, arguing that the deduction was an integral part of the commission calculation, and that it was therefore an  “allowable or authorized deduction.”  In an opinion dated July 7, 2014, the Massachusetts Superior Court denied the salon’s motion.  The court noted a prior decision of the Massachusetts Supreme Judicial Court, which “emphasized that deductions which further an employer’s interests, including the transfer of overhead costs to employees, are impermissible, as running strongly against the legislative policy which  underlies the Massachusetts Wage Act." 

If followed by other courts in Massachusetts, the implications of this decision could be significant, and affect the rights not only of hair stylists whose pay is affected by “product deductions,” but also other employees paid pursuant to complex commissions formulas that may similarly involve an impermissible transfer of the employer’s costs.  If a deduction is not permitted, the deduction is likely a violation of the Wage Act, which requires that the employee be awarded three times the amount of the wages withheld, along with reimbursement for reasonable attorneys' fees incurred in enforcing the Wage Act.

Maybe in My Backyard? Massachusetts Right to Farm Laws

 

By SLN Attorney Jenna Ordway


The United States boasts a rich and long-standing agricultural history. The term “Agriculture” covers a broad spectrum of activities; including everything from massive corn and soybean farms to the local horse-back-riding stable to the small-scale poultry grower to Christmas tree farms. Regardless of their agricultural niche, most everyone in the agricultural industry faces a common risk: the encroachment of urban development into traditional agricultural areas by persons unfamiliar with farming, farming practices, and the common noises and smells farmers have come to know and love.

This surge in urban encroachment has brought a rise in the number of nuisance complaints against farmers. Including complaints concerning odors, flies, dust, noise from fieldwork, spraying of farm chemicals, slow moving farm machinery, and other natural byproducts of farming operations. To provide a defense against these crippling nuisance suits and to protect agricultural operations, the majority of states, Massachusetts included, have enacted Right-to-Farm statutes.

The Massachusetts Right-to-Farm statute, which emphasizes the right to farm accorded to all citizens of the Commonwealth under Article 97 of the Massachusetts Constitution, states,

No action in nuisance may be maintained against any person or entity resulting from the operation of a farm or any ancillary or related activities thereof, if said operation is an ordinary aspect of said farming operation or ancillary or related activity; provided, however, that said farm shall have been in operation for more than one year. This section shall not apply if the nuisance is determined to exist as the result of negligent conduct or actions inconsistent with generally accepted agricultural practices. 

M.G.L. c. 243, § 6.

This statute, and other various related statutes, provides a substantial defense to farmers against neighbors uninitiated to the sights and smells of a farm. Farms located in mixed neighborhoods, or who are sitting on prime real estate, or who are essentially the “last farm standing” in their area, often face pressure from surrounding residents that cause towns to take some form of action.  Though many towns have enacted the Right-to-Farm statutes into their by-laws, many others are unfamiliar with the Right-to-Farm statute, which sets forth specific procedures for towns filing nuisance complaints. If a farm is the subject of a nuisance complaint and receives a notice to abate from their town, it is important to obtain prompt legal advice as the farm only has ten (10) days from receipt of the notice to file a petition to review with the court.

Whether you have an issue with your town or just your surrounding neighbor(s), consulting an attorney familiar with Massachusetts’ Right-to-Farm laws may save you substantial time and money down the road, especially when it comes to determining whether your property falls under the safe harbor provided by the Right-to-Farm statutes. Farming is a treasured part of our history and it’s important that we safeguard our right to farm so that it may continue as a valued part of our future.

Attorney Jenna Ordway is an associate at Smith Lee Nebanzahl, LLP and admitted to practice law in Massachusetts. Her interest in Agricultural law stems from her long-time involvement with horses. She recognized the difficulty farmers face securing representation by an attorney who understood a farm’s day-to-day operations, especially when the farm iss located close to an urban or sububan environment. In addition to practicing law, Jenna continues, with her family, to operate Althea Farm, a horse boarding facility in Sharon, Massachusetts, in existence for over 15 years.

 

President Obama's Minimum Wage Order: Can Employees Enforce it?

 

  By Rebecca Rogers, SLN Attorney

 

The morning after President Obama’s State of the Union speech, I arrived at the office in the middle of a spirited discussion at our morning meeting.  President Obama had pledged to issue an Executive Order that would require government contractors to pay their employees a minimum wage of $10.10 per hour.  We handle a fair number of employment cases, including cases under the Massachusetts Wage Act and claims for violation of state and federal minimum wage laws, and were all wondering how such a provision would actually be enforced if a company was unscrupulous enough to represent to the federal government that it would pay $10.10 per hour but still pay its employees less. 

Here is why that is a question without an easy answer: there are state and federal statutes protecting a worker’s right to be paid minimum wage that provide for awards of multiple damages and attorneys’ fees if an employer does not meet that obligation.  But “minimum wage” is established by statute, not executive order.  There are also state statutes providing similar remedies if an employer does not pay agreed upon wages in a timely manner, whether minimum wage or otherwise.  But this federal subcontractor minimum wage is arguably neither: it is a creature of executive order, not the minimum wage statutes, and it is really an agreement between the subcontractor and the federal government, not between the subcontractor and its employees.  Clearly an employer could lose its status as a federal government contractor for violating this requirement, but would there be any remedy for the aggrieved employee?

After a few minutes we settled on the possibility of bringing a suit as a third party beneficiary to the contract between the employer and the federal government.  It turns out that the world of third party beneficiaries to government contracts is a fascinating place with plenty of twists and turns.  Most statements of the law appear deceptively simple at first, and most courts maintain that they are following the Restatement (Second) of Contracts, §302, which divides the world into intended beneficiaries of contracts, who are third party beneficiaries who can sue to enforce a promise, and incidental beneficiaries of contracts, who are not and cannot maintain such a lawsuit.  The Restatement explains that:

 

“Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either (a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.... An incidental beneficiary is a beneficiary who is not an intended beneficiary.”

Or, put more simply, “[i]n order to recover as a third-party beneficiary, the plaintiffs must show that they were intended beneficiaries of the contract.”  Cumins Society Inc. v. BJ’s Wholesale Club, Inc., 455 Mass. 458, 464 (2009).  Any third party right to sue is further limited by § 313 of the Restatement, which limits the situations under which a company that has contracted to provide goods or services to the public can be held contractually liability to a third party beneficiary.  Some courts have interpreted this provision to foreclose third party beneficiary status unless the contract contains specific language providing plaintiffs with the right to enforce its terms.  Jama v. United States Immigration and Naturalization Service, 334 F.Supp.2d 662, 687 (N.J. 2004). 

And indeed there is an impressive amount of variation in the case law on the subject.  This variation is probably due the wide variety of situations in which the question of third party liability can arise in a contract with the federal government.  For example, there is a large body of case law devoted to construction workers building large public works projects.  In those cases allowing any member of the public as an intended beneficiary of the contract could open up a construction company to all manner of contractual liability that might be contrary to the public good and decisions in favor of third party status are rare.  But on the other hand, consider an organization that has a contract to provide homeless services to veterans in a particular city.  Allowing those veterans to sue to enforce the promises made in the contract regarding the services that would be provided appears to be entirely consistent with the public policy goals of the contractual arrangement.  More recently, courts have considered whether home owners are third party beneficiaries to the contracts between banks and Fannie Mae signed as part of the HAMP program that tried to encourage mortgage modification and reduce foreclosures.  

The common refrain from these cases is that if there is language in the contract clarifying the intent of the parties to exclude people as third party beneficiaries then individuals who did not sign the contract are unlikely to be found to be intended beneficiaries.

A good illustration of this is a line of Massachusetts cases deciding the contractual liability of housing authorities to the residents of the buildings they manage.  In the housing authority cases the Massachusetts Supreme Judicial Court first held, in 1989, that a resident could be a third party beneficiary to a contract between a housing authority and the federal government.  Ayala v. Boston Housing Authority, 404 Mass. 689 (1989).  In reaching this conclusion, the court observed that “[t]o rule that these plaintiffs were not intended beneficiaries would mock the very goals which Congress and HUD set out to achieve through the Section 8 program…to afford children of families of meager means a decent, safe, and sanitary place to live.”  Id. at 700-701.  But shortly after this decision language was added the contracts between the housing authority and the federal agency that said that residents were not intended third party beneficiaries.  Eight years later, when faced with nearly identical claims but working with the new contract with the exclusionary clause for third party status, the SJC held that, despite its earlier ruling, residents under the new contracts no longer had third party status and could not bring breach of contract claims.   Barnes v. Metropolitan Housing Assistance Program, 425 Mass. 79, 84 (1997).

Courts have deferred to similar language even when it is not in the contract itself but is incorporated into the contract by reference.  Thus, in Markle, which dealt with question of whether a home owner/borrower was a third party beneficiary to the contract between a mortgage lender and the federal government as part of the Home Affordable Modification Program (“HAMP”), the court relied on exclusionary language in Fannie Mae’s “Selling and Servicing Guides,” which were incorporated into the contract by reference.  Markle v. HSBC Mortgage Corp. (USA), 844 F. Supp. 2d 172, 181 (D. Mass. 2011).  That exclusionary language provided that “no borrower or other third party is intended to be a legal beneficiary of the MSSC or the Selling Guide or Servicing Guide or to obtain any rights or entitlements through Fannie Mae’s lender communications or contracts.”  Id. at 181.  The court deferred to that characterization of the contract and held that the homeowner did not have standing to sue based on a breach of contract.

It is a puzzle to many of us that courts have so consistently concluded that distressed homeowners are not “intended beneficiaries” of a comprehensive program enacted by the federal government to help distressed homeowners.  It seems unlikely that President Obama intended to leave borrowers with such limited recourse when their loan servicers failed to follow the requirements of HAMP, but the language of the contracts have led to exactly that result.  The moral of the story seems to be that, if the Obama administration wants to empower employees to enforce the new $10.10 minimum wage, care should be taken to ensure that the language of the agreements with subcontractors reflects that intent.

Measure Twice Cut Once: Why You Actually Might Need a Divorce Lawyer

Part One in a series on divorce and family law by Smith Lee Nebenzahl lawyer Beth M. Nussbaum

Perhaps you and your spouse want a do-it-yourself divorce without wasting your soon to be divided assets on lawyers.  You agree to share everything equally, from money and assets to responsibility for your children's expenses, and you may have heard horror stories from friends and family about mounting legal bills and lawyers unnecessarily complicating a divorce.  Those stories are important cautionary tales, and should cause you to be careful in your choice of a divorce lawyer.  Unfortunately, however, the reality is that what seems simple in concept can become immensely complex in reality, particularly as years go by, when both spouses move on with their lives and circumstances change. One example of where the right divorce lawyer can help save you greater expense and headaches in the long run is the separation agreement.

Let's say you and your spouse actually really agree about equal division of property and responsibility for children.  The court will require you then to submit a separation agreement, sometimes called a divorce agreement, which typically includes arrangements for the division of real and personal property and assets, alimony, and various other items such as health and life insurance, retirement funds, trusts, debts, liabilities, taxes, living situation, inheritance, and/or recognizes and incorporates a premarital agreement, otherwise known as a prenuptial agreement, if applicable. Where children are involved, a separation agreement also addresses child custody, parenting plan, child support, and education, among other issues.  That list alone should signal that even in an amicable, uncontested divorce, there are pitfalls to be wary of, and a poorly drafted separation agreement can lead to expensive legal disputes in the future. 

Consider the following scenarios:

1. A separation agreement generally states its “intent” that after divorce, the parties will equally share costs for the children’s and parents’ medical and dental insurance. In its numbered parts, however, the agreement states that the husband will cover the wife and children’s insurance but that if there is an extra cost to insure the wife, that she must pay such cost herself.  Elsewhere the agreement states that the parties are responsible for their own uninsured costs.
2. A separation agreement states that after divorce, the parties will provide the children with health insurance and child support, including for post-secondary education, until the children reach “emancipation,” and the agreement provides for the sharing of college tuition and “incidental costs.”

At the time these agreements were signed, the parties presumably had a shared understanding and agreement about how the agreements were supposed to work, doubtless informed by their understanding of the circumstances at the time they signed them.  Fast forward several years, however, and changed circumstances may make the application of their provisions hotly disputed.

Agreement Number One is problematic in two ways:  first, the separation agreement’s “intent” that the parties equally share costs is in direct conflict with its actual numbered provisions, which specify that the parties shoulder their individual costs.  Second, the agreement does not provide for a change in scenario, such as if the husband changes employment and no longer insures the children.  A better crafted separation agreement would address the probability that the parties’ insurance situation might well change, likely would contain gender neutral language that would anticipate such change, and any statement of intent would be consistent with the agreement’s numbered provisions.
 
Agreement Number Two does not define “emancipation.”   Is it 18, 21, or 23 years old?  If defined by statute, is it the statute effective at the date of the agreement or when a party seeks court intervention with regard to enforcement or modification?  Also, current health insurance rules provide for coverage of children up to the age of 26 by their parents’ policy.  Is there or should there be a different age of “emancipation” for health insurance than for other child support purposes?

Agreement Number Two also fails to place any parameters on what constitutes post-secondary “incidental costs?”  Do such costs include room and board alone?  Books?  Computer?  What about a microwave, television, sports equipment, car, plane tickets, or any of the other items college students may need?  Does one parent have unlimited authority to approve an "incidental cost" and send the other parent a bill for half the cost, even if it is a discretionary expense that the non-deciding parent would not have approved on his or her own dime?

A cursory separation agreement simply cannot account for all of the details or post-divorce changes in situation that can trip up application of the agreement.  As a result parties must often expend substantial, unnecessary legal costs down the road on lawyers trying to correct poorly drafted separation agreements through complaints for contempt or for modification.  Importantly, where the agreements were drafted at a time when the parties believed they agreed on their basic terms, the subsequent disputes often arise when one or the other parent/spouse is in a significantly different set of circumstances and prepared to fight. 

Can you anticipate every possible scenario?  Of course not.  But a good divorce lawyer can help you anticipate potential life changes that could affect the operation of the agreement, guided by the experience of issues that have caused post-divorce disputes for other couples, and help ensure that the agreement you sign anticipates what can be anticipated and provides clear and consistent principles for what cannot. 

Beth M. Nussbaum
http://www.slnlaw.com/Family_Law.html

Through the Google Glass: mx.google error messages and finding the right lawyer

This post is not about the law, per se.  It is more about adventures in the operation of a law business, and intended primarily to offer to whomever is looking the solution to an email problem that has bedeviled us for months.
 
We are a small business, with some degree of technological autonomy- our domain is hosted by a large web-hosting service, but our emails are routed through our own Microsoft Exchange server on site.  A few months ago, we began getting bounce back messages when sending emails to people with gmail addresses.  This was actually a fairly enormous problem, as many of our clients and prospective clients use gmail accounts (compounded by the fact that we frequently remind people not to communicate with us via their employer's email accounts, due to issues surrounding privacy and attorney client privilege that could be the subject of an entirely separate post).  The error message went like this:

"mx.google.com gave this error:

[####:#a##:####:#:#a#:a###:#aa#:a###] Our system has detected that this message does not meet IPv6 sending guidelines regarding PTR records and authentication. Please review https://support.google.com/mail/?p=ipv6_authentication_error for more information. w8si14224913qag.54 - gsmtp

 

Your message wasn't delivered due to a permission or security issue. It may have been rejected by a moderator, the address may only accept e-mail from certain senders, or another restriction may be preventing delivery."

 

Wait, what?  If practically nothing about that message looks like a language you speak, then you can appreciate our dilemma.  I will spare you the step by step description of our flailing about trying to find an answer, but say simply that between our web-hosting service, our ISP, our local IT consultant, and a variety of techy friends and acquaintances, nobody seemed to have the obvious answer to the question.  Here is the answer, because if you hit upon this post you are probably looking for it.

• The basic problem is that Google now requires validation that the domain that is sending an email is real- this has always been the case, but they now require validation both of your regular old IP address, which looks like this: ###.###.###.#, and your IPv6 address, which follows a different protocol (the series of numbers and letters in the brackets that comes in the bounce-back message is in fact the IPv6 address of your mail server--I made ours anonymous above, because nobody reading this really needs to know the IPv6 address of my mail server).  The main thing you need to know is: (i) someone needs to configure your domain to include a DNS record for your IPv6 address; and (ii) your IPv6 address is the gibberish that mx.google just sent back to you. Armed with that basic information, somebody ought to be able to help you.

• If you happen to use a service like Go Daddy and want to fix this yourself, you can log in to your account, navigate your way to the DNS manager, then select your domain and click "edit zone."  In the Go Daddy system, you will see a button that says "add record-"  On the drop-down menu "select record" you will see an option "AAAA(IPv6 Host)."  Select that, then add the numbers and digits from the bounce-back message, and follow the prompts to save. 

So why am I posting this on a law blog?  First, I never was able to find a clear answer to this online, so consider this paying it forward. 

 

Second, I suspect that my relationship with technology is not unlike the relationship of many non-lawyers with the law.  I am not a complete idiot, am as able as anyone to browse the web for information, and generally able to analyze a problem and identify solutions.  But when the problem involves something I know too little about to even know what questions to ask, or who to direct those questions to, and the internet offers information that ranges from too-technical-to-be-useful-to-me to downright incorrect, I am stuck.  And it stinks to be stuck on something so stupid.

 

What broke the dam for me was encountering someone whose professional expertise allowed him to explain to me, in structural terms, what was happening and where and how the problem needed to be solved.  In many ways, that is what we do as lawyers.  Our clients are intelligent people who solve complex problems every day in their own fields, but often do not have the information to even know which legal box or field of expertise a problem belongs in.  The internet is there, but in many areas of law has the same defects as a resource that it did for me- ranging from too-technical-to-be-helpful to downright incorrect, with the right answer out there somewhere but no meaningful guide to finding it.

 

So, if you are reading this and think you have a legal problem but do not know where to start (and did not actually stop reading after the fix to the gmail problem), here is my advice:

• Start your inquiries with a lawyer or law firm that has multiple practice areas.  In every profession, specialists tend to recommend solutions that are within their specialty.  It's just a comfort zone thing, but not always the right answer for you.  If it is not obvious to you what your issue is, it is better to have someone with a broad base help you issue-spot than to go to someone who wants to put your issue into the box that s/he understands best.  

• Always ask why.  Always.  You may not be trained in the law but you are probably a smart and logical person- if someone gives you an explanation of what you can and cannot do, you have a right to understand how they came to that conclusion, whether you end up working with that lawyer or somebody else.  And knowing why will help you make good decisions.

• Don't sweat the small stuff.  If an extra half hour of giving your lawyer facts that will help him or her correctly diagnose the situation costs you an additional hundred dollars or so, imagine the cost of paying that lawyer to follow the wrong path for months.

• And finally: the person who pointed me in the direction of the right answer to my gmail problem did not ask for or require my business as a quid pro quo for that information, though he is certainly high on my list if I ever need any of the services he provides.  The lawyer you want will be similarly willing to do a little triage for you without an immediate commitment.

 Good luck to problem solvers everywhere, and thanks to our clients for their patience while we figured how to keep communicating with them....

     

  

 

The Price of a Job: Employee Noncompetition Agreements in Massachusetts

So you have found a job in your field, perhaps everything you expected and desired, or perhaps something simply acceptable under the circumstances.  You have considered the salary and benefits, the way in which this opportunity fits your short or long term career objectives, the cost of the commute, and a number of other variables capable of some degree of projection and evaluation.

Then you are handed a non compete agreement to sign.  How do you assess that? To be honest, many do not: jobs are not exactly growing on trees, and the prospect of someday leaving this new and exciting job may seem distant. Even if you do undertake to analyze what the non-compete might mean, however, except at the extremes on either end of the spectrum, you have little chance of coming to a reliable conclusion under existing Massachusetts law.

Consider the following scenarios:

·         A high level technical employee with access to critical information about product design, subject to a two year non compete agreement;
·         A hairdresser paid on a commission basis and making no more than $45,000 a year subject to a one year non compete agreement within a certain radius of her employer’s location;
·         A salesperson who has represented the company to customers for many years subject to a four year, nationwide non compete agreement;
·         A telephone salesperson whose job entails cold calling prospective leads subject to a one year non compete agreement;
·         A recent college graduate who worked in a sales capacity for less than a year subject to a one year non compete agreement.

Do these individuals stand on the same footing legally if their employer seeks to enforce the noncompetition agreement and will these agreements be enforced?  The answer under Massachusetts law, currently, is a resounding “maybe.”  

A non compete agreement (also known as a covenant not to compete or a restrictive covenant) signed in connection with employment is enforceable under Massachusetts law only if it is: (i) supported by consideration; (ii) reasonable in scope; and (iii) necessary to protect a legitimate interest of the employer. What that actually means is subject to considerable debate and can lead to different and inconsistent results.

A judge might or might not, for example, decide that the hairdresser cannot be held responsible for the employer’s goodwill if she goes into competition, that a four year restriction for the salesperson is unreasonable, or that the relative inexperience of the recent college graduate and the short duration of her employment would not place her in a position of damaging the employer’s goodwill by competing.   A judge might, or might not, decide that the technical employee carried with him or her valuable trade secret information that should not be allowed to benefit a competitor during the noncompetition period, or that the sales representatives were sufficiently connected with the employer’s goodwill that the restriction on competition is reasonable.

Employment lawyers are a creative lot, therefore a number of additional attacks on the enforceability of noncompetition agreements have evolved over the years under Massachusetts law, including arguments that: (i) material changes in job circumstances void the non compete agreement; (ii) an employer’s failure to pay compensation as agreed is a material breach of the employment agreement and excuses the employee’s performance under the non compete agreement; and (iii) non compete agreements signed after the beginning of the employment relationship are not supported by consideration and are therefore not enforceable. 

If you came to me tomorrow wanting help getting out from under a noncompetition agreement, some or all of the above theories could be available to you.  If, however, you came to me tomorrow and asked for advice about whether you should sign a noncompetition agreement, or whether an agreement you want your employees to sign is enforceable, the above analysis might be the best I could offer you. 

This is cold comfort if you are trying to truly understand the price of the job you are considering, or the extent to which you want to restrict your employees’ activities post-employment, particularly since the lack of clarity in the law virtually guarantees some non-trivial expenditure of legal fees on both sides should the agreement ever come into dispute.

There are two bills pending in the Massachusetts House of Representatives that could help bring better clarity to the law of non compete agreements in Massachusetts.  One, sponsored by  Representative Sheila Harrington, would declare noncompetition agreements unlawful except in connection with certain delineated circumstances, such as the sale of a business or dissolution of a partnership.  See House Bill 1729.  Another, sponsored by Representatives Lori Ehrlich  and William Brownsberger, would create a presumption that non compete agreements lasting six months or less were reasonable, and a presumption that longer non competes were unreasonable.  Under this bill, a court could only enforce a non compete agreement whose duration was found unreasonable if: (i) the employee breached a fiduciary duty to the employer; (ii) the employee has unlawfully taken property of the employer; or (iii) the employee has, at any time, earned an annualized salary of $250,000 or more.  See House Bill 1715. 

Though these are clearly drafted with the employees' interests in mind, there is something to be said for certainty and clarity for both employees and employers.  As employees would benefit from the ability to assess the potential impact of an agreement before signing one, employers would also benefit from having a clearly defined set of rules of the road when drafting their own non competes and making decisions about enforcing those agreements.

A concluding note of non-legal advice: both employers and employees could benefit from appreciating that there are many mutually beneficial things that can come out of a former employment relationship, virtually none of which are accomplished by non compete agreements or legal battles.  The guidelines in the proposed bills, or the much less clearly defined guidelines that can be found in existing caselaw, are perhaps a starting point for parties on both sides of the issue to chart a reasonable course that can avoid unnecessary conflict.