Massachusetts Noncompete and Trade Secret Reform Will Have Far-Reaching Impact

Jones Day

Businesses across the country are feeling the effects of a pair of laws recently enacted in Massachusetts.

The "garden leave" clause in Massachusetts' new noncompete law dictates that during the period in which a departed employee is prohibited from working for a competitor, the previous employer must compensate the departed employee by paying at least 50 percent of his or her salary. However, compromise language added to the final version of the law permits “mutually-agreed upon consideration” to be substituted for the garden leave compensation.

Massachusetts' Trade Secrets Act replaces a six-part test for trade secrets with a statutory definition similar to that of the Uniform Trade Secrets Act ("UTSA"). Notably, under the Massachusetts act, a trade secret must provide actual or potential economic advantage to its owner, in contrast to the UTSA, which in most states requires actual economic advantage.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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