BOSTON, June 13, 2025
Massachusetts Court Clarifies Non-Solicitation Agreements
A recent ruling clarifies the Massachusetts Noncompetition Agreement Act, confirming the enforceability of forfeiture clauses related to non-solicitation agreements.
- the Massachusetts Supreme Judicial Court (SJC) ruled on June 13, 2025, that forfeiture clauses tied to non-solicitation breaches aren’t considered “forfeiture for competition agreements.”
- The ruling clarifies the scope of the Massachusetts Noncompetition Agreement Act, confirming employers can enforce forfeiture of separation payments for violating non-solicitation agreements.
- The SJC reversed a lower court’s decision, providing clarity for employers and practitioners.
In a notable decision, the Massachusetts Supreme Judicial Court (SJC) has provided clarity on the enforcement of non-solicitation agreements. The court determined that a forfeiture clause triggered by violating a non-solicitation agreement does not fall under the category of a “forfeiture for competition agreement,” as defined by the Massachusetts Noncompetition agreement Act (the act). This ruling, issued on June 13, 2025, reinforces the ability of Massachusetts employers to enforce forfeiture of separation payments when employees breach non-solicitation and other restrictive covenants.
The Genesis of the Case
The legal battle began in 2017 when susan Miele joined Foundation Medicine Inc. (FMI) and signed a restrictive covenant agreement. This agreement included a non-solicitation provision, preventing Miele from soliciting FMI employees for a year after her departure. When miele left FMI in 2020, she entered a transition agreement that maintained the terms of the original agreement. It also contained a forfeiture clause, stating that if Miele breached either agreement, any unpaid benefits would be forfeited, and previously paid benefits would need to be returned to FMI “immediately.”
Did you know?
Restrictive covenant agreements can include various provisions beyond non-solicitation, such as non-compete and non-disclosure clauses. The specific terms and enforceability can vary significantly by jurisdiction.
After leaving FMI, Miele joined another company. FMI then alleged Miele recruited several of their current employees during the restricted period. Consequently, FMI stopped payments to Miele under the transition agreement and demanded repayment of the disbursed funds.Miele responded by suing FMI for breach of contract, and FMI countersued, claiming Miele had violated her agreements by soliciting their employees.
Miele moved for judgment on the pleadings, arguing that the forfeiture clause, based on the non-solicitation provision, brought the agreements under the Act’s purview, rendering the forfeiture clause unenforceable. FMI countered that the non-solicitation provision was outside the Act’s scope, which states the Act does not apply to “covenants not to solicit.” The superior Court partially sided with Miele, finding the forfeiture provision unenforceable under the Act. At FMI’s request, the court asked the following question for appellate review:
Does [the Act]apply to a non-solicitation agreement incorporated into a termination agreement if the termination agreement includes a forfeiture provision if the employee breaches the non-solicitation agreement?
Reader question:
How might this ruling affect employees considering a new job opportunity after signing a non-solicitation agreement? What steps should they take to ensure compliance?
The SJC’s Decisive Stance
After careful consideration, the SJC ruled that a forfeiture clause triggered by breaching a non-solicitation agreement does not constitute a “forfeiture for competition agreement.” The SJC emphasized the statute explicitly excludes non-solicitation agreements from the broader category of non-competition agreements.Justice Serge Georges, writing for the court, explained that treating a non-solicitation covenant differently due to a forfeiture mechanism would contradict the Act’s express exclusion of non-solicitation agreements.
The critical flaw in Miele’s position is that her reading would expand the scope of forfeiture for competition agreements to include non-solicitation provisions-despite the statute’s clear exclusion of such provisions from the definition of noncompetition agreements.As forfeiture for competition agreements are expressly defined as a subset of noncompetition agreements, and non-solicitation agreements are explicitly excluded from that category, solicitation cannot be reintroduced thru the back door of “competitive activities” without rendering the statute internally contradictory.
The court reversed the trial court’s decision and sent the case back for further proceedings.
Impact and Future Implications
The SJC’s ruling clarifies the scope of the Massachusetts Noncompetition Agreement Act, affirming that non-solicitation agreements, even with forfeiture clauses, are outside its scope. As a result, a forfeiture clause in a separation or transition agreement, which states that an employee forfeits severance pay for violating a non-solicitation or non-disclosure agreement, is enforceable. The decision addresses concerns from employers and practitioners following the lower court’s ruling.
What does the SJC ruling mean for employers?
The ruling confirms that employers in massachusetts can enforce forfeiture clauses related to non-solicitation agreements. This means that if an employee violates a non-solicitation agreement, an employer can withhold or recoup separation payments.
“`html
Employee Considerations and Best Practices
Building upon the SJC’s recent ruling, it’s crucial to understand how this decision impacts employees, especially those contemplating new job opportunities. Employees in Massachusetts should pay close attention to their existing agreements and understand the potential ramifications of violating non-solicitation clauses, even with forfeiture provisions in place. This clarification solidifies the need for careful review and adherence to established legal frameworks.
For those considering a job change, the Massachusetts Noncompetition Agreement Act, and its associated rulings, necessitates a proactive approach. Non-solicitation agreements, as highlighted in the Foundation Medicine Inc. (FMI) case with Susan Miele, often accompany employment contracts and separation agreements. Employees need to understand the definitions and are legally obligated to comprehend the scope and duration of any non-solicitation clauses that they have signed.
Before accepting a new role, it’s imperative to carefully examine all agreements from previous employers, especially the non-solicitation and non-disclosure clauses. Analyze all contracts, review non-solicitation clauses, and identify any limitations on contacting former colleagues.
Table of Contents
