A high-stakes legal battle is unfolding in Massachusetts courts, pitting Boston Beer Company against two former sales representatives. The core of the dispute centers on the company’s use of the state’s 2018 non-compete law and, specifically, its interpretation of the ‘mutually agreed upon consideration’ clause.
Garden Leave: A Misunderstood Requirement
The Massachusetts law, enacted to limit overly restrictive non-compete agreements, mandates ‘garden leave’ – paying former employees at least half of their annual salary – to enforce such clauses. However, the ‘mutually agreed upon consideration’ clause, intended as an alternative, has created considerable confusion. Employers can offer this, but its precise value remains undefined.
Boston Beer Company’s Offer
The two former sales reps allege that Boston Beer offered them significantly less than half of their salaries as ‘mutually agreed upon consideration’ – a mere $3,000. This figure sharply contrasts with the plaintiffs’ annual salary range, raising concerns about potential undervaluation.
The Legal Dispute
The Massachusetts Legislature’s initial aim was to curb restrictive non-competes. Critics argue the ‘mutually agreed upon consideration’ clause provides excessive employer leeway. The plaintiffs claim this could permit companies like Boston Beer to unfairly reduce compensation. The case highlights a critical ambiguity within the 2018 law, demanding clarification.
A Precedent-Setting Case
This lawsuit echoes a previous, inconclusive ruling involving Cynosure and Reveal Lasers, focusing on the value of stock options as ‘mutually agreed upon consideration.’ The outcome of this current case has the potential to significantly impact non-compete agreements across Massachusetts. The timeline for resolution is expected to extend into 2026, leaving the legal landscape uncertain.
Implications for Employers
The case will serve as a test for Massachusetts employers utilizing non-compete agreements. A favorable ruling for the plaintiffs could lead to stricter regulations and increased transparency within the spirits industry, and potentially beyond.
