Massachusetts Court Rules Parent Company Cannot Enforce Noncompete Against Subsidiary Employee

A Massachusetts court ruled yesterday that a parent company cannot enforce a noncompetition agreement against an employee of one of its subsidiaries, a decision that could impact how businesses structure employee contracts.

Judge Debra A. Squires-Lee of the Massachusetts Superior Court determined on September 11, 2025, that Anaplan Parent, LP could not prevent Timothy Brennan from working for a competitor after his resignation from Anaplan, Inc., a subsidiary of the parent company. The ruling centers on the interpretation of the Massachusetts Noncompetition Agreement Act, enacted in 2018, which requires noncompetition agreements to be signed by both the employer and the employee. Brennan had signed noncompete provisions in equity agreements with the parent company, but not directly with Anaplan, his actual employer.

Judge Squires-Lee concluded that the parent company was not considered the “employer” under the Act, rendering the agreement unenforceable. The 2018 Act mandates specific requirements for enforceable noncompetes, including written documentation and explicit advice to employees regarding their right to legal counsel before signing – requirements that must be “strictly followed” according to prior court decisions. This case highlights the importance of carefully reviewing the signatory parties on these agreements. For more information on noncompete agreements, see the Nolo legal encyclopedia.

This decision is a matter of first impression in Massachusetts and may be appealed. Experts suggest businesses should immediately review their noncompetition agreements to ensure they are signed by the correct entity, the direct employer, to avoid similar legal challenges. The Massachusetts Bar Association offers resources for employers navigating these complex regulations.

Officials have indicated the ruling may be appealed, and its impact will be further clarified pending any subsequent legal proceedings.