On June 13, 2025, the Massachusetts Supreme Judicial Court (SJC) issued a significant decision in Miele v. Foundation Medicine, Inc. (SJC-13697) confirming that the Massachusetts Noncompetition Agreement Act (the "MNAA") does not apply when forfeiture clauses are tied to non-solicitation agreements.
What is the MNAA?
The MNAA, which took effect on October 1, 2018, significantly limits the enforceability of noncompetition agreements with employees and independent contractors in Massachusetts. The MNAA imposes strict statutory requirements on noncompetition agreements, including written notice and advance timing requirements, a "garden leave" provision or other mutually agreed consideration, geographic and temporal reasonableness, and public interest and fairness standards. Importantly, the statutory definition of "noncompetition agreement" in the MNAA expressly excludes non-solicitation agreements.
What is a forfeiture clause?
A forfeiture clause is a contractual provision that conditions an employee's entitlement to certain post-employment benefits (e.g., severance pay) on compliance with specific covenants (e.g., non-solicitation obligations).
Case Background and Decision
Susan Miele, a former employee of Foundation Medicine, Inc.
("FMI"), signed a non-solicitation agreement at the
outset of her employment in 2017, and reaffirmed it in a transition
agreement in 2020. Broadly, the transition agreement provided that
Miele would remain with FMI for a certain period of time, in
exchange for approximately $1.2 million in transition benefits.
That transition agreement further included a forfeiture clause
stating that if she breached the transition agreement – or
any other agreement with FMI, including the non-solicitation
agreement – she would forfeit her transition benefits. After
Miele's departure, FMI alleged she violated the
non-solicitation agreement by soliciting employees. FMI notified
Miele that the breach of the non-solicitation agreement constituted
a breach of her transition agreement. FMI ceased severance payments
and demanded that Miele repay severance payments received to
date–under the transition agreement's forfeiture clause.
Miele sued, claiming that the forfeiture provision violated the
MNAA and was unenforceable.
While the lower court sided with Miele, the SJC reversed the
decision. The Court ruled that because the Legislature explicitly
excluded non-solicitation agreements from the MNAA, forfeiture
clauses that related back to non-solicitation agreements are
similarly not subject to the MNAA's restrictions.
As a practical matter, what does Miele mean for Massachusetts employers?
The SJC's ruling provides welcome clarity for employers that rely on non-solicitation covenants to protect business interests. The key takeaways include:
- The MNAA does not apply to non-solicitation agreements. These agreements can be used without satisfying the stricter formalities set forth in the MNAA (e.g., advance notice, garden leave).
- Forfeiture clauses tied to non-solicitation agreements are enforceable. Employers may lawfully condition benefits like severance or bonuses on compliance with non-solicitation terms without needing to satisfy the requirements of the MNAA.
- General contract principles still apply to non-solicitation agreements. Although not governed by the MNAA, non-solicitation agreements must still be reasonable, narrowly tailored, and consistent with public policy to be valid.
Going Forward
We recommend that employers take this opportunity to work with their employment counsel to review their current employment, separation, and incentive agreements to ensure that non-solicitation language and forfeiture provisions are clearly drafted, appropriately tailored, and aligned with the SJC's recent guidance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
