Consideration happens, but not during garden leave.

Byline: Russell Beck and Erika Hahn

The 2018 Massachusetts noncompete law made many significant improvements to preexisting law, but garden leave is not one of them.

We wrote an article in October titled, "The new noncompete law: compromise happens." In it, we explained why we believe that although the new law requires "fair and reasonable consideration" for noncompetes entered into during employment, something short of that perhaps precisely what was required before the law became effective is all that is likely required for a noncompete entered at commencement of employment.

As we noted (and as is still the case), the only reported decision to provide any insight into the consideration issue so far is Nuvasive, Inc. v. Day, 2019 WL2287709, at *4 (D. Mass. May 29, 2019) (Casper, J.), which seems consistent with our interpretation of the new law. Specifically, in that decision Judge Casper observed that the following statement in a noncompete would be sufficient under the new law: "In consideration of my engagement by the Company, the compensation I ... receive from the Company (including for example monetary compensation, Company goodwill, confidential information, restricted stock units and/or specialized training) ... ."

While our analysis focused on what was required by "other mutually-agreed upon consideration," it still left us in the same quandary we've all been in for a while: Why did the Legislature bother to include a so-called "garden leave clause" option to "other mutually agreed upon consideration"?

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Why did the Legislature bother to include a so-called "garden leave clause" option to "other mutually agreed upon consideration"?

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There are many potential answers. As we noted previously, the most likely is that it was a legislative compromise, necessary to allow the other (very significant) changes in the law to pass (including notice requirements, a ban on noncompetes for nonexempt employees, a 12-month durational limit, and, of course, the "fair and reasonable consideration" requirement for employees asked to sign a noncompete mid-employment).

Because our analysis focused on the "other mutually-agreed upon consideration" language, we did not tackle the separate question of why garden leave clauses are also addressed in two other places in the statute: (1) as a defined term in the definitions and (2) in the exclusion from the definition of "noncompetition agreement." Nor did we address the effect of using a...