Boston Beer battle puts unusual provision in Massachusetts' noncompete law to the test

"The venture capital industry fought for years to persuade state lawmakers to impose strict restrictions on noncompete agreements. The VC crowd eventually succeeded in 2018, with the Massachusetts Legislature adopting a one-year limit on all noncompetes - contracts that prevent employees from working for a rival for a certain period of time, often in a specific region. And they were outlawedoutright for lower-paid hourly workers."

"That entails providing at least half of the former worker's annual salary, to help cover expenses while they wait out the time limit before joining a competitor. An alternative was added after a few large business organizations, including the Greater Boston Chamber of Commerce and Associated Industries of Massachusetts, pushed back at this concept. They eventually persuaded legislators to include an alternative to garden leave payments, defined in the law as "mutually-agreed upon consideration.""

The Massachusetts Legislature adopted a one-year limit on noncompete agreements in 2018 and prohibited them for lower-paid hourly workers. The law requires employers to provide garden leave equal to at least half of the former worker's annual salary to cover expenses during the restricted period. Employer groups secured a statutory alternative labeled "mutually-agreed upon consideration" without specifying acceptable forms. A proposed class-action lawsuit challenges Boston Beer's noncompete policy and whether employers may substitute nominal or inadequate consideration instead of paying mandated garden leave. The undefined alternative creates enforcement ambiguity and litigation risk.

Read at Boston.com