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Employment Law Alert: Severence Claims and Non-Competition Legislation 02/15/2011

Posted by Morse Barnes-Brown Pendleton in Attorney News, Employment, Legal Developments.
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Employment Attorney Christopher PerryBy Christopher Perry

Severance Claims Covered By Wage Act According To Superior Court

In a surprising ruling, a Superior Court Justice has ruled that a former employee’s claims to severance pay are covered by the Massachusetts Wage Payment Statute (the “Wage Act”). As a result, such claims could give rise to treble damages and an award of attorney’s fees to the employee.

After getting approval from the Massachusetts Attorney General to make a claim under the Wage Act, Juergens brought a law suit against Microchip, under various legal theories. In ruling on Microchip’s motion to dismiss Juergens’ Wage Act claim, the Court opined that a 2005 Supreme Judicial Court decision, Wiedmann v. Bradford Group, Inc., 444 Mass. 698 (2005) authorized an “expansive interpretation” of the Wage Act than had prior cases. With no additional analysis, the Court ruled that claims for severance pay fell within the Wage Act, and denied the employer’s motion to dismiss.

To learn how employers can protect themselves in these situations, please read our full Employment Law Alert.

Non-Competition Legislation Introduced Once Again

For the second time in the last two years, members of the Massachusetts House of Representatives have introduced legislation regarding non-competition agreements into the Legislature. If passed, the proposed bill would significantly curtail the ability of employers to enforce non-competition agreements in Massachusetts.

The bill is quite similar to the bill filed in 2010, with two exceptions. First, the requirement that, in order for a non-competition agreement to be binding on an employee he/she must earn at least $75,000 annually has been removed. In addition, employees who enter into non-competition agreements during employment must no longer be made a payment from their employer of at least ten percent of their then annual compensation for there to be adequate consideration for the agreements; however, the agreement must be supported by “fair and reasonable consideration.”

To learn what this legislation could mean for employers, please see our full Employment Law Alert.

For more information or any questions on employment, please contact Chris Perry.

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