The Massachusetts legislature passed the Massachusetts Noncompetition Agreement Act (MNAA) in 2018, culminating a longstanding effort to balance employers’ rights to protect legitimate business interests—such as trade secrets, goodwill, and proprietary information—against employees’ rights to pursue future job opportunities. The law imposes restrictions on the use of noncompetition agreements entered on or after October 1, 2018, with employees who work or reside in Massachusetts for at least 30 days prior to the termination of employment. On June 13, 2025, in Miele v. Foundation Medicine, Inc., the state Supreme Judicial Court issued a unanimous decision that narrows the potential scope of the MNAA’s definition of noncompetition agreements and preserves for employers the ability to protect one of their most valuable assets, their employees.
In Miele, the Plaintiff and a former employee of Defendant, Foundation Medicine, Inc., signed a restrictive covenant agreement in 2017 that included a non-solicitation provision which barred Plaintiff during employment and for one year following employment from soliciting the Defendant’s employees. In 2020, the Plaintiff executed a Transition Agreement in connection with her separation from employment that reaffirmed the non-solicitation agreement, provided substantial monetary benefits in exchange for her continued employment with the Defendant through the end of 2020, and that included a forfeiture clause providing for forfeiture of any unpaid benefits and for repayment of previously paid benefits in the event of her breach of any Agreement with the Defendant. The Plaintiff subsequently breached the Transition Agreement and non-solicitation provision by recruiting several employees from Defendant within the one-year time period. The Defendant ceased payments under the Transition Agreement and demanded repayment of benefits disbursed. The Plaintiff sued for breach of the Transition Agreement and payment of the outstanding benefits, and the Defendant counterclaimed for breach of the Transition Agreement and non-solicitation agreement and sought a declaration that it was not obligated to pay the remaining transition benefits.
The Superior Court judge determined that because the Transition Agreement imposed adverse financial consequences on the Plaintiff based on her solicitation of former employees, the Transition Agreement qualified as a “forfeiture for competition agreement,” which is included in the definition of a noncompetition agreement under the MNAA. The judge further concluded that solicitation agreements are excluded from the coverage of the MNAA only if they do not impose a forfeiture for breach. Consequently, the lower court held that the Defendant could not enforce the forfeiture provision of the Transition Agreement because a forfeiture for competition agreement is subject to the MNAA requirements, which it did not satisfy. The lower court further would have permitted the Defendant to pursue its breach of contract claim for violation of the non-solicitation agreement.
On an application for direct appellate review, the Supreme Judicial Court addressed the issue of whether a non-solicitation agreement, which is expressly excluded from the definition of a noncompetition agreement under the MNAA, nevertheless is subject to the MNAA as a forfeiture for noncompetition agreement where a forfeiture clause is triggered solely upon the employee’s breach of the non-solicitation agreement. Disagreeing with the Superior Court’s order, the Supreme Judicial Court reversed the lower court’s order that had granted the Plaintiff’s motion for judgment on the pleadings. Based on the plain language of the statute, the Supreme Judicial Court concluded that 1) the MNAA clearly excludes non-solicitation agreements from the definition of noncompetition agreements, and 2) forfeiture for competition agreements are expressly defined as a subset of noncompetition agreements. Therefore, the Court held that an agreement that contains a forfeiture clause triggered by a breach of a non-solicitation agreement does not constitute a forfeiture for competition agreement subject to the MNAA. To hold otherwise would impermissibly expand the definition of noncompetition forfeiture agreements to include non-solicitation agreements contrary to the terms of the MNAA. The decision signals that the MNAA will be narrowly construed to apply to agreements that prohibit competitive activities that are not explicitly excluded from the definition of noncompetition agreements.
What This Means for Employers
The decision affirms employers’ ability to enforce the terms of non-solicitation agreements and forfeiture for violation of non-solicitation agreements and to pursue remedies for breach. Going forward, employers should also consider whether reaffirmation agreements, which typically incorporate previously executed restrictive covenants, comply with the MNAA.
[View source.]
