To continue our series on trade secret employee contract clauses, we’ve surveyed the First Circuit for updates to the law relating to restrictive covenants. Such covenants remain predominantly governed by statutes in Maine, Massachusetts, New Hampshire, and Rhode Island, while Puerto Rico continues to govern them by common law. And with no significant updates since 2020, restrictive covenants remain disfavored and under increased scrutiny in the First Circuit. Generally, these courts will only enforce noncompete agreements that are reasonable, no broader than necessary to protect an employer’s legitimate business interests, properly noticed, and in line with public policy. The applicable law for each state is set forth below.
Law Governing Restrictive Covenants
Requirements for Enforcement of Restrictive Covenants
|26 M.R.S. § 599-A
|Noncompete agreements are contrary to public policy and are enforceable only to the extent that they are:
An employer must:
An employer may not require or permit an employee earning wages at or below 400% of the federal poverty level to enter into a noncompete agreement.
|Massachusetts Noncompetition Agreement Act, M.G.L. 149 § 24L
|To be valid and enforceable, noncompetition agreements must be:
Regarding the notice requirements,
Noncompetition agreements are not enforceable against:
|N.H. Rev. Stat. §§ 275:70, 275:70-a
An employer who requires a potential employee to execute a noncompete agreement must provide a copy of the agreement to the potential employee prior to the employee’s acceptance of an offer for employment.
If a noncompete agreement has not been disclosed, the noncompete will not be enforceable against the employee. However, all other provisions relating to employment, confidentiality, nondisclosure, trade secrets, intellectual property assignment, or any other employment agreement provision will remain in full force and effect.
Post-employment restrictive covenants are valid and enforceable if the restraints are reasonable and:
Any noncompete agreement between an employer and an employee who makes 200% of the federal minimum wage or less is unenforceable.
New Hampshire courts disfavor and narrowly construe restrictive covenants.
|Rhode Island Noncompetition Agreement Act, R.I. Gen Laws §§ 28-59-1 to 28-59-3
|Noncompetition agreements are prohibited for employees who are:
The Act does not apply to agreements:
Rhode Island courts will only enforce a noncompete agreement if:
|Noncompetition agreements are valid but subject to the following conditions (see Arthur Young & Co. v. Vega III, 136 D.P.R. 157 (1994)):