Hunton Employment & Labor Perspectives

Massachusetts employers received a meaningful reprieve this month when Governor Maura Healey’s proposal to tighten the Commonwealth’s noncompete statute was dropped from the state’s economic development legislation. 

The proposal was part of the administration’s broader Mass Wins initiative, filed on April 16, 2026. The administration cast the measure in part to close what it viewed as a loophole in the Massachusetts Noncompetition Agreement Act (“MNAA”) and would have required that employers provide garden leave or other mutually-agreed consideration of at least equivalent value for a noncompetition agreement entered into at the beginning of or during an employment relationship to be enforceable. But the proposal failed to gain traction on Beacon Hill, and Senate leaders left it out of their version of the economic development bill. 

For now, that leaves the existing statutory framework intact, including the MNAA’s allowance for “other mutually-agreed upon consideration” instead of traditional garden leave. For employers that use non-competes to protect customer relationships, confidential information, and other legitimate business interests, this is an important result.

Background

On April 16, 2026, Governor Healey’s office filed An Act Relative to Massachusetts Winning Global Investment, Talent, and Innovation, better known as the “Mass Wins” bill. In her cover letter, the Governor said the bill was designed to keep Massachusetts competitive in key sectors and to support continued investment, talent recruitment, and business growth.

One provision of the bill would have amended the MNAA. Under the current statute, a Massachusetts noncompete generally cannot last more than one year after employment ends, and an employer seeking to enforce a noncompete entered into at the commencement of an employment relationship or after the commencement of the relationship (but not in connection with a separation) must provide garden leave equal to half of the employee’s salary during the restricted period, unless the parties agree to “other mutually-agreed upon consideration.” 

The statute, however, does not define that alternative consideration. The proposed amendment would have required any such substitute consideration to be negotiated in connection with the employee’s separation from employment and be of at least equivalent value to the garden leave payments otherwise required by the statute. Significantly, the proposed amendment did not require any change to noncompetition agreements made in connection with the end of employment and are provided with seven days to rescind the agreement.

The Administration’s Rationale

The administration presented the amendment as a worker protection measure intended to ensure that employees are fairly compensated during any period in which they are barred from competing. The proposal responded to criticism that some employers have used the statute’s undefined alternative consideration language to offer payments far below what traditional garden leave would require.

Critics of the current law have pointed to examples of employers offering as little as $1,000 in place of garden leave. Supporters of stricter reform also argued that non-competes can limit employee mobility and, in turn, weaken the Commonwealth’s broader economic competitiveness.

That dispute is now playing out in federal court. In Boyd et al. v. The Boston Beer Co., Inc., currently before the U.S. District Court for the District of Massachusetts, former Boston Beer sales employees have challenged the company’s noncompete practices in a proposed class action. They argue that a $3,000 payment made upon departure is not the kind of substitute consideration the Legislature had in mind when it allowed an alternative to garden leave. Boston Beer, in contrast, argues that the analysis should take into account other benefits provided during employment, including training and the opportunity to participate in an equity incentive plan. The case remains pending and could offer useful guidance on how Massachusetts courts view modest departure payments and noncash benefits offered in support of post-employment noncompete obligations. 

The Pushback

Business groups and other opponents of the proposal argued that the MNAA’s reference to “other mutually-agreed upon consideration” is not a loophole at all, but a core part of the legislative compromise that made the statute possible in the first place. They also argued that the amendment reflected an unduly narrow interpretation of consideration. In their view, compensation supporting a noncompete can take many forms, including signing bonuses, equity grants, promotions, retention awards, specialized training, and other benefits negotiated as part of the broader employment relationship. Opponents further contended that forcing the parties to negotiate substitute consideration only at separation would be unworkable, given that employee departures often happen on compressed timelines and under circumstances that are already adversarial.

Major employer groups made the same argument publicly, emphasizing that companies need flexibility to use stock options, equity, and other forms of compensation while still protecting proprietary information and intellectual property. Associated Industries of Massachusetts and the Greater Boston Chamber of Commerce were among the groups opposing the change, describing it as overly rigid and poorly suited to a one size fits all approach.

Implications for Employers

For now, Massachusetts employers remain subject to the existing MNAA framework and may continue to rely on the statute’s allowance for “other mutually-agreed upon consideration” instead of salary-based garden leave. That preserves flexibility for employers that use equity, stock options, incentive compensation, training, or other noncash benefits as part of the overall package supporting restrictive covenants. 

That said, the current framework is hardly risk free. Public criticism of nominal substitute payments, coupled with ongoing litigation over what counts as adequate consideration, suggests that non-competes supported by low value alternatives will continue to draw scrutiny.

Employers using Massachusetts non-competes should review whether their agreements clearly identify the consideration supporting the restriction, whether that consideration would look fair, reasonable, and defensible if challenged, and whether employers should elect to provide garden leave for employees in sensitive positions in order to ensure enforceability of a non-competition agreement.

Key Takeaways

• The Legislature left intact one of the MNAA’s most significant practical features by preserving the ability to use “other mutually-agreed upon consideration” instead of traditional garden leave for noncompetition agreements entered into at the commencement of or during an employment relationship. 
• The outcome reflects continued resistance to replacing the statute’s flexible approach with a rule that would more closely mirror salary-based garden leave.
• The debate highlighted a clear divide between those who view the current law as insufficiently protective of employees and those who view it as a carefully calibrated compromise for innovation focused businesses.
• For employers, the episode is a reminder that careful drafting and clear documentation remain critical when enforcing Massachusetts non-competes under the existing statute.

Employers should take this opportunity to review their existing noncompetition agreements to ensure continued compliance with the MNAA with the understanding that adequacy of consideration will likely continue to be a topic of litigation in Massachusetts.