The current issue of New England In-House Counsel features Stephen Riden’s guide for improving non-compete agreements, called “Taking your non-compete agreement from good to great.”  A PDF version of the article can be downloaded here.

The guide is tailored to assist in-house counsel in crafting robust non-compete agreements.  It provides the basic requirements for an enforceable non-compete agreement in Massachusetts and suggests several provisions that can be added to existing non-compete agreements.

For instance, the article suggests the addition of a provision that can potentially extend the duration of the agreement:

Tolling provision. Say an employee leaves your company but neglects to disclose that they are leaving to work for a competitor in violation of their non-compete agreement. This is not an uncommon scenario. What happens if that breach only comes to light two months later? Assuming that the non-compete agreement has a one-year duration, that would mean the effective duration would be reduced to the 10 remaining months.

However, a clause that extends the duration of the non-compete period for the amount of time that passes before the employer learns that its former employee is engaged in prohibited activity provides additional protection.

The same clause could also toll the non-compete period for the time it reasonably takes the employer to obtain injunctive relief to halt further impermissible competition. In both of these circumstances, the tolling stops the clock for activities beyond the employer’s control and helps to ensure that the employer obtains the full benefit of its non-compete agreement.

It is important to note that, in some states, such a tolling provision can create ambiguities, which militate against its use, while in others, it may suffice to limit its reach, as a court may construe an excessive tolling period as unreasonable.

Click here for the current edition of New England In-House Counsel.

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