This time, it’s Boston Beer’s noncompete policy in the crosshairs. On Dec. 1, a Texas attorney filed a lawsuit challenging the brewer of Sam Adams and Twisted Tea on behalf of two former sales reps from Chicago.
At issue is the Massachusetts law’s requirement that an employer needs to pay for what’s known as “garden leave” to enforce a noncompete agreement. That entails providing at least half of the former worker’s annual salary, to help cover expenses while they wait out the time limit before joining a competitor.
An alternative was added after a few large business organizations, including the Greater Boston Chamber of Commerce and Associated Industries of Massachusetts, pushed back at this concept. They eventually persuaded legislators to include an alternative to garden leave payments, defined in the law as “mutually-agreed upon consideration.” What constituted “mutually-agreed upon consideration,” though, was not spelled out.
Yes, it could include stock options. But what about something paltry? A pair of Red Sox tickets or a Dunkin’ gift card? The law doesn’t say whether this “consideration” has to be comparable with half of the person’s salary.
NEVCA wasn’t happy about that end result. The organization was worried the alternative could effectively neuter the garden leave requirement that it fought hard to include, by potentially allowing for an agreement stacked in the employer’s favor.
In Boston Beer’s case, plaintiffs Hailey Boyd and Grace Murtagh say they were promised “mutually-agreed upon compensation” of $3,000 to wait out their one-year noncompete. Three grand buys you more than a Boston Kreme Donut and a large caramel swirl iced coffee. But it’s still less than 5 percent of their former salaries.
Boston Beer, led by founder Jim Koch, declined to comment specifically about this litigation but did share a general statement on its approach, saying it uses noncompetes to prevent confidential information from ending up with direct competitors. The company says many former coworkers have gone on to have long, successful careers in the beer business for brewers such as Harpoon and Sierra Nevada without violating their noncompetes.
This is the first attempt at a class-action suit that Dallas attorney Ashley Pileika has filed against Boston Beer, though she has sued the company before over its noncompetes on behalf of individual clients. In her newest claim, she argues that the “mutually-agreed upon consideration” phrase in state law does not give employers the leeway to reduce the amount they would pay beyond what’s otherwise obligated for garden leave.
That’s a reasonable assumption of the legislators’ intent. However, the law never spells it out. There’s nothing that says the compensation has to be comparable. Because of the vagueness back in 2018, a lawsuit seemed inevitable, one that could force a judge to finish the job. It was just a question of when.
Who would have expected it would take seven-plus years, and counting? Certainly not Gregory Bombard of Greenberg Traurig, a Boston lawyer who specializes in trade-secret litigation. After 10 years of legislative debate, he says, the garden leave clause was a measure that helped to get the noncompete law over the finish line. But no one can say for sure what meets the test of “mutually-agreed upon consideration” in Massachusetts.
Bombard says no court decisions have definitively ruled on the issue yet. One other Massachusetts case that has produced some sort of decision on the issue happened amid a legal fight between Cynosure and Reveal Lasers, rivals in the competitive world of cosmetic laser equipment. In an early decision in that case three years ago, Judge Patti Saris determined a noncompete agreement met the standard because it provided stock options. But Saris didn’t actually spell out how much those options had to be worth.
Maybe more clarity will come from George O’Toole, the judge who has been assigned the newest Boston Beer case. The proceedings will likely play out throughout 2026, but it would probably take even longer for the issue to go to trial, if there’s no settlement or dismissal of the case.
Ari Glantz, who just stepped down as executive director of NEVCA, was also surprised this issue about what can qualify for “mutually-agreed upon consideration” has lingered for so long without a court resolution. Getting the state to crack down on noncompetes was the organization’s biggest Beacon Hill priority when he joined NEVCA in early 2015.
The idea was to foster a culture that spurs innovation and startup creation without fear of entrepreneurs being shackled to their former employers — similar to how things work in California, where most noncompetes are not enforceable.
Glantz said it’s hard to tell, particularly with the disruption caused by the COVID-19 pandemic, if our 2018 law has succeeded on that front.
The relatively low $3,000 payments from Boston Beer represents the sort of thing NEVCA worried about when it unsuccessfully pushed back about the idea of an alternative to garden leave, something Glantz still refers to as a “potential poison pill.”
All that said, Glantz sees the lack of litigation up to this point as a positive sign. In the years since the Massachusetts law took effect, he has heard far fewer examples of companies enforcing noncompetes.
So maybe the law is working as it was intended — despite the ambiguity that still needs to be resolved in a courtroom.
Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.
