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Non-competition, non-solicitation and confidentiality agreements

Cautionary reminder about non-compete agreements and the material change doctrine

The “material change” doctrine means that a noncompetition agreement is voided if there are material changes to an employee’s duties or compensation after the agreement is signed.  The change must be substantial rather than something basic like a change in job titles.  For example, courts ordinarily frown on enforcing non-competes when the company slashes the employee’s compensation.  That can constitute a “material change” that will void the non-compete.

Consider a scenario where the employee experiences a drastic cut in responsibility, but not a drastic cut in pay.  Does this give the employee an automatic “escape hatch?”  Not necessarily.  If the employee agreed in the written contract language that the non-compete agreement is binding even if such changes occur, the employee is bound by that stipulation.

Beware of language like this: “Any change in the employee’s position or title with the company, with or without the employee’s consent, shall not cause the agreement to terminate and shall not effect any change the employee’s obligations under this Agreement.”

Pamela A. Smith
Law Office of Pamela A. Smith
233 Needham Street, Suite 540
Newton, MA 02464
617-969-2900

pam@pamsmithlaw.com

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