Rocketlawyer.com has recently been advertising “free non-compete agreements” online. In fact, it is the very first advertisement that pops-up when you google “non-compete agreements.” So, I decided to test how accurate those agreements are. I registered on the website, told them I needed a non-compete agreement, and then answered a few questions online about what state my imaginary company was in, the purpose of the non-compete agreement, how long I wanted the non-compete to last, and a few others. The website then generated a 3-page clean-looking and easy-to-ready non-compete agreement for me that I could download and start using immediately. The whole process took less than five minutes and was, indeed, free. Excellent, right?
Not so fast.
When I filled out the questionnaire to build the agreement, I specified that my imaginary company was located in Massachusetts and that the agreement was supposed to be governed by Massachusetts law. As an attorney, I happen to know that Massachusetts’s non-compete requirements are very specific and much more stringent than in many other states. None of these unique Massachusetts requirements were reflected in the agreement that I generated. The result was that the contract was not enforceable.
For example, Massachusetts prohibits non-compete agreements with hourly employees. When I filled out the questionnaire on rocketlawyer.com, I specifically indicated that I was seeking to enter in a non-compete with an hourly employee. Nothing on the website alerted me that my non-compete would be unenforceable for such an employee.
Massachusetts also prohibits non-compete agreements longer than 1 year. When I specified on the website that I wanted a 2-year non-compete restraint, there was no alert telling me that my chosen time period would not be enforceable in my chosen state.
Furthermore, under the Massachusetts non-compete statute, a noncompete agreement must state that the employee may consult with counsel prior to signing. The agreement generated by rocketlawyer.com did not contain that language, further making the agreement not enforceable.
Finally, the Massachusetts non-compete law, which went into effect on October 1, 2018, also requires that employer provide a copy of the non-compete agreement to an employee before a formal offer of employment is made or 10 business days before they start work, whichever comes first. Nothing on the rocketlaywer.com website alerted me as that I would have to give the non-compete agreement to a prospective employees in advance of their start date or it would be unenforceable.
There were other major Massachusetts requirements that did not make it into the standard non-compete agreement generated by rocketlawyer.com making that agreement not valid in that particular state.
BOTTOM LINE: Using a standard one-size-fits all form is not a good idea if you plan on actually enforcing you company’s agreement down the road. Every state has their own set of rules regarding non-compete agreements, which have undergone a lot of changes in the past several years. While an offer of a “free” legal agreement is tempting, if you are looking for an agreement that will actually hold up in court, consulting with a real attorney who is up-to-date on the changes in the non-compete laws is a much better route.
Leiza Dolghih is a partner at Lewis Brisbois Bisgaard & Smith LLP in Dallas, Texas and a Co-Chair of the firm’s Trade Secrets and Non-Compete Disputes national practice. Her practice includes commercial, intellectual property and employment litigation. You can contact her directly at Leiza.Dolghih@LewisBrisbois.com or (214) 722-7108.