WHAT EMPLOYEES SHOULD KNOW ABOUT MASSACHUSETTS EMPLOYMENT LAW
In this relationship the employer and the employee serve at the will of each other for an indefinite period of time. Most employment relationships fall into this category. Either party may terminate the relationship for no reason whatsoever, usually without advance notice, although in certain circumstances notice may be required.
An at-will employment has advantages and disadvantages for both parties. The employee is free to leave his employer at any time to accept a better job. The employer has the right to discharge an employee at any time, for any reason, or for no reason at all so long as a discharge is not discriminatory, against public policy or in breach of any specific federal or state law. It has been attorney Wallace’s experience that the courts repeatedly have been reluctant to abolish this relationship. The United States historically has endorsed an employee’s right to work for whomever he chooses and an employee’s unfettered right to discharge employees in its sole discretion. At times application of this doctrine can seem cruel and economically harsh to a long-term employee, who is suddenly terminated without receiving any warnings whatsoever. The loss of a job is often emotionally devastating, similar to losing a loved one. Not only is a job loss a financial hardship, it also is a severe blow to one’s self-esteem.
While it is usually impossible for the terminated employee to avoid the vicissitudes of the at-will doctrine, attorney Wallace strives to help the fired or laid employee make a bad situation better. Quite often at-will employees discharged without cause are offered severance packages in return for releasing the employer from any and all claims arising out of the employment relationship. Often attorney Wallace is able to negotiate a better severance package, depending on the quality of the terminated employee and financial strength of the employer.
If termination is due to a large-scale lay off (commonly known as a reduction in force RIF), we carefully scrutinize the circumstances of our client’s termination. An employer whose objective of a reduction in force is the reduction of costs is certainly a legitimate and sound business decision.
However, an employer may violate the laws prohibiting age discrimination where the aim of the reduction in force is simply to reduce labor costs by discharging higher paid employees. Higher salary is frequently correlated with or serves as a proxy for age. An employee could offer to his employer continued service with a reduction in pay. This would put the burden on the employer to show why such an arrangement is not possible and could be evidence of age discrimination if not accepted by the employer.
The at-will doctrine is alive and well in Massachusetts, and many employers expressly print in their employee handbooks that the employer has the right to terminate the employment relationship at any time with or without cause. Most handbooks also state that there is no job security or a contract of employment for any definite duration.
Most employees assume that as long as they do their jobs they will not be fired. When they see language in a handbook that they can be fired for no reason and have no job security, they may seek other means to obtain job security such as organizing a union. Some employers have decided voluntarily to limit their right to discharge at will because they want to bolster employee morale and/or avoid the formation of a labor union.
Employment for a Definite Term
In this relationship usually a written contract is entered into between the employer and the employee for a specific duration, rarely more than five years. Such contracts are rarely created for lower-level clerical and blue-collar workers, who are usually at-will employees and whose employment may be terminated at any time for no reason. Often key employees may demand a written term contract for employment security because the employer is prevented from discharging such an employee at its will, but rather only for just cause. In other words, the employer must have a good reason to discharge this employee, such as poor performance, willful misconduct, theft, etc. However, even these contracts can be terminated by the employer prior to their expiration date In the event that dire financial circumstances necessitate layoffs.
Noncompetition and Confidentiality Agreements
Many employees are required by employers to execute noncompetition and confidentiality agreements, particularly when an employee will be privy to the employer’s trade secrets and confidential business information. Many businesses utilize such agreements, particularly for technical, sales and managerial personnel. Typically, a noncompetition agreement will state that for a specified period of time within a defined geographic territory, a former employee is barred from competing with his former employer. A confidentiality agreement when trade secrets are involved often will be very broad or unlimited in geographic scope.
Requirements for Enforceability
It is attorney Wallace’s observation that in today’s booming economy many employers are requiring new employees to sign noncompetition and confidential agreements. Employees tend to change jobs more frequently and often run into problems when they leave their job to join a competitor. Although Massachusetts courts are reluctant to prevent an individual from earning a living, noncompetition agreements will be enforced so long as they are: necessary to protect the former employer’s legitimate business interest; and reasonably limited in time and space.
One recurring theme our firm has observed in noncompetition cases involves the employee’s customers while working with his or her former employer. If a noncompetition agreement exists barring solicitation of the former employer’s customers, the former employee and his or her own new employer are faced with a threatening dilemma. In occupations such as sales, money management, and marketing, the employee usually has intimate knowledge of his previous employer’s customers. This knowledge is also valuable to a competitor who may desire to hire the employee to enhance its own customer base. Unless a settlement can be attained, an employee who leaves his employer to join a competitor may by subject to a court injunction barring contact with his or her former employer’s customers. In addition, he or she could be subject to an award of damages, and the new employer could also become liable to the former employer.
These suits could be avoided altogether if an employee consults an attorney before ever signing a noncompetition agreement. If an individual already has a customer base (i.e., goodwill) prior to commencing employment, this goodwill should clarify that the employee’s own book of business is specifically excluded from the agreement. The objective of a reasonable noncompetition agreement is to protect the employer’s goodwill, not to appropriate the goodwill of the employee.
