Two former sales representatives have challenged Boston Beer’s non-compete clause in separate lawsuits in U.S. District Court, with one calling the policy “unreasonable, unconscionable and unenforceable under Massachusetts law.”
In October, Boston Beer filed a complaint against a former employee it said violated the terms of his employee agreement by taking a job at hard cider competitor Downeast. In 2011, Boston Beer sued former sales rep Judd Hausner and Anchor Brewing, which hired him to manage distributor relationships in Northern California.
The company – which makes Twisted Tea, Truly Hard Seltzer, Angry Orchard, Samuel Adams and Dogfish Head – now finds itself on the other end of two non-compete-related lawsuits, one in Massachusetts and one in Washington.
The most recent lawsuits have several commonalities. Both claim the company uses the non-compete clause that employees are required to sign as a way to unfairly limit employees’ opportunities within the beverage-alcohol industry, and that the company fosters a “toxic work environment.”
“Boston Beer has refused to address employees’ complaints of the company’s toxic work environment,” both complaints read. “Instead, it has required and continues to require that its employees sign an unreasonable and overly broad non-compete agreement which operates, among other onerous and burdensome ways, to restrict them from continuing to work in the craft brewery industry in any capacity.”
Boston Beer requires employees, including both plaintiffs John Brennan and Maxx Hockenberry, sign an employment agreement upon being hired that includes a non-compete agreement barring them from working for a competitor for one year after leaving the company. Boston Beer defines a competitor in this case as any producer or importer of “beer, malt beverage, hard cider or product produced by the company at any time during an employee’s tenure” within 25% of Boston Beer’s price to wholesalers.
Boston Beer is one of few major beer industry companies to maintain and enforce non-competes, a practice that has come under scrutiny in recent years. The Federal Trade Commission (FTC) proposed a rule banning non-competes in January 2023, arguing that they suppress wages and stifle entrepreneurship.
“Boston Beer’s non-compete agreement ended all three of our clients’ careers in the craft beer industry,” attorney Ashley Pileika – who represents Hockenberry, Brennan and a third former employee – told Brewbound. “Generally speaking, non-compete agreements suppress healthy competition, wages and employee mobility. I am not aware of any other craft brewer, besides Boston Beer, that requires employees sign a non-compete agreement as a condition of employment.”
For its part, Boston Beer said its use of non-competes helps protect its investment in employee training.
“We invest a substantial amount of time, effort and money on training, and we share sensitive information widely with our coworkers to help them understand our strategy and build goodwill with our customers,” a company spokesperson told Brewbound. “A one-year non-compete helps protect customer goodwill, prevents confidential information from immediately being used to benefit a direct competitor, and enables us to benefit from our best-in-class training programs.”
In the most recent complaint, Hockenberry – a former on-premise key account specialist in Seattle – claims Boston Beer violated Washington’s Non-Compete Statute, which banned the practice in almost all cases in 2020.
When Hockenberry resigned from Boston Beer in April 2021, he believed that he was beholden to the non-compete because HR business partner Lauren Manchester reminded him of it in his exit interview.
“Despite the fact that such agreements lack legal enforceability in the state of Washington, Mr. Hockenberry cooperated in good faith and signed the non-compete document under the false assumption it was valid,” Hockenberry’s complaint reads. “Mr. Hockenberry was aware that Boston Beer had taken legal action to enforce the non-compete in the past.”
Hockenberry claims he wanted to find another job in the craft brewing industry, but did not want to run afoul of his non-compete. So, he “worked various odd jobs – including a seasonal role at a vineyard and waiting tables at a restaurant,” according to the complaint. He “struggled financially and went nearly the entire year without consistent income.”
Hockenberry has accused Boston Beer of per se violations of the Washington Non-Compete Statute and the Washington Consumer Protection Act, as well as breach of contract, breach of implied covenant of good faith and fair dealing and unjust enrichment.
Under Washington’s non-compete statute, non-compete covenants are “void and unenforceable” in the state unless they are disclosed before a job offer is accepted or the employee involved is paid more than $100,000 in salary or $250,000 as an independent contractor.
In his last role with Boston Beer, Hockenberry’s salary was $86,000. During the following year when he took “various odd jobs,” his income “plummeted to approximately $47,000.” He has not been able to secure a full-time beer industry job and now works in media sales, according to the complaint.
“Because Boston Beer informed Mr. Hockenberry he was subject to a one-year non-compete agreement, Mr. Hockenberry has foregone promotions, salary increases and growth within the brewery industry,” the complaint said.
Brennan filed his complaint in U.S. District Court for the District of Massachusetts on January 3. The former senior brewery representative claimed Boston Beer retaliated against him twice for corroborating a coworker’s account of gender discrimination. The first was when the company terminated him in June 2022 and again in July 2022 when he claims it threatened to pursue legal action against his then-employer, Portland, Maine-based Lone Pine Brewing.
Brennan, who worked for Boston Beer between 2019 and 2022, has accused the company of tortious interference with contact and business relationships, breach of contract, breach of the implied covenant of good faith and fair dealing and unjust enrichment. He also claims that the company violated the Massachusetts Consumer Protection Act.
Massachusetts enacted reform in 2018 that requires employers to provide employees with “garden leave,” 50% of their base salary for the duration of the restricted period or “mutually agreed upon consideration,” an alternative the law did not define.
In an email from Manchester to Brennan obtained by Brewbound, she told him his final check would include his wages, payment for his unused PTO and a “$3,000 non-compete payout per your employment agreement,” which would amount to $250 per month for the 12 months he was barred from working in the industry.
“When Mr. Brennan refused to accept this money, Boston Beer directly deposited it into his bank account – despite previously indicating a check would be mailed to him, should he choose to accept these terms,” the complaint read.
Under Massachusetts law, Boston Beer would have had to have offered Brennan half of his $55,000 base salary ($27,500) or he would have had to agree to the $3,000 as “mutually agreed upon consideration,” which he did not. In a statement shared with Brewbound, Brennan called the payment “insulting.”
Because Brennan “was not provided with adequate consideration for executive of the non-compete” and “not offered sufficient monetary payment or guaranteed employment for a specific period of time in return for the execution of the non-compete agreement,” and the non-compete “was not narrowly tailored and contained no geographic limits,” it was “unreasonable, unconscionable and unenforceable as a matter of law,” according to the complaint.
Believing his non-compete could not be enforced, Brennan was hired at Lone Pine on June 20, 2022. At Lone Pine, Brennan was hired to cover Vermont and parts of upstate New York, neither of which he covered during his time at Boston Beer.
Eight days after he started at Lone Pine, a Boston Beer HR representative called the brewery to inform it of Brennan’s non-compete, which kicked off a series of conversations between both companies’ legal teams.
“It is our understanding that you have an enforceable non-compete agreement with Boston Beer that your attorney has taken the position that the agreement is not enforceable, and that Boston Beer disagrees with that position and intends to enforce the agreement,” Lone Pine director of finance and HR Peter Eiermann wrote in a July 21, 2022, letter to Brennan. “Based upon the current situation, we have decided to terminate your employment with Lone Pine.”
Following his termination, Brennan was unemployed for more than three months and left the beer industry, according to the complaint. Brennan fears he will never sell beer again, he told Brewbound.
“The non-compete destroyed any chance I had of furthering my career in the beer industry,” he said in a statement. “After I received a considerable promotion to work for another brewery, Boston Beer contacted my subsequent employer and intimidated this brewer into letting me go, threatening to sue the company for hiring me.
“It is my belief this bullying tactic shows Boston Beer will stop at no lengths to prevent its employees from working for another brewery,” Brennan continued. “Boston Beer intentionally holds employees back by paying them low salaries and instilling a culture of fear, should they consider furthering their careers elsewhere.”
The policy appears unpopular internally. Brennan’s complaint claims that 30% of Dogfish Head employees opted to leave the company rather than sign the agreement when Boston Beer acquired the Delaware-based craft brewery in 2019.
Brennan also alleged Boston Beer does not enforce the clause evenly. A fellow senior brewery representative joined Lone Pine less than one year after leaving Boston Beer with no penalty. In 2010, a former Boston Beer district manager departed the company “to join his father’s craft brewery, Coronado Brewing,” according to an affidavit from Hausner as part of the company’s lawsuit against him and Anchor Brewing.
Claims of a ‘Toxic Work Environment’
In addition to both challenging the non-compete, Hockenberry and Brennan worked for the same area manager in Boston Beer’s New England sales division, Michael Rice. Both plaintiffs accuse him of fostering workplace toxicity.
Before a promotion that relocated him to Seattle, Hockenberry was a brewery representative in Vermont reporting to Rice. During that time, Hockenberry claimed Rice “repeatedly insulted the appearance and intelligence of female employees, customers, and women generally,” according to his complaint.
During a “work with” when Rice visited Hockenberry’s territory for a day in the market, Rice allegedly forced Hockenberry to look at a sexual picture Rice received from a woman he was dating, which made Hockenberry “very uncomfortable.”
In Brennan’s complaint, he detailed the successful start to his Boston Beer career. He was promoted to senior brewery representative six months after he was hired, earned Rice’s “highest annual review on his team” and “was on track to become a manager-level employee,” according to his complaint.
However, when Brennan spoke to HR about Rice as part of an internal investigation into discrimination complaints made by Brennan’s teammate Katie Fritts, he noticed his standing at the company began to tank.
With the help of Pileika, both Brennan and Fritts filed complaints with the Massachusetts Commission Against Discrimination (MCAD), which investigated both and dismissed them due to lack of probable cause.
The MCAD’s investigative disposition of Fritts’ complaint detailed her career path at the company, which included her being rehired in New England in July 2019 after resigning from a sales role in the Pacific Northwest due to a cross-country move her family made for her husband’s career. A “special exception” was granted to bring Fritts back on due to her “performance and positive feedback” from “managers, wholesalers and co-workers,” the complaint said.
When she arrived in New England, Fritts said “female coworkers warned her to ‘tip-toe’ around respondent Rice to avoid negative feedback, discrimination and retaliation,” according to her MCAD complaint. She was subject “to a number of adverse employment actions, including excluding her from a golf tournament with [Rice’s] clients in favor of male employees, lack of support and guidance, and issuance of a poor performance review.”
In its portion of the MCAD complaint, Boston Beer noted that Fritts was given feedback during her mid-year performance review in 2021 that she did not act upon by the time of her following full-year review. Because of this, Rice gave her a “mixed” rating due to “her failure to perform certain basic job duties following her mid-year review,” according to the disposition.
The brewery said region manager Katie Healy recommended a performance improvement plan (PIP) for Fritts “in early April 2022,” but a meeting between the two could not be scheduled before Fritts made her formal complaint to HR about her team’s alleged hostile work environment on April 15. After filing that, Boston Beer said Fritts was put on paid leave until June 2022, when she was invited to return to work and report directly to Healy. Fritts resigned.
MCAD only has jurisdiction over events that happened within 300 days of Fritts’ filing on February 10, 2023, which backs up to April 16, 2022, the day after she filed her complaint to Boston Beer. Because of this, Fritts’ exclusion from the golf tournament in favor of male co-workers, Rice’s “lack of support and guidance, issuance of a poor performance review, and fostering a hostile work environment are untimely,” MCAD compliance officer Sabrina Drumond wrote in the disposition.
“In reviewing the totality of the evidence, investigation reveals insufficient evidence upon which a fact finder could form a reasonable belief that it is more probable than not that the respondent committed an unlawful practice,” Drumond wrote.
Brennan’s MCAD complaint was also dismissed for a lack of probable cause and was subjected to the same 300-day timeline as Fritts’, as it was also filed on February 10, 2023.
Both Fritts and Brennan have appealed MCAD’s decisions; Pileika told Brewbound the manner in which the commission’s decision was reached “was very odd.”
“Usually, these cases take years,” she said. “This determination was made in less than a year. The assigned investigator did not contact witnesses we provided or follow up on information the agency requested that BBC did not provide. And the determination was based on a very conclusory account of the evidence we provided and did not even take into account Katie and John’s termination and retaliation thereafter.”
In his MCAD complaint, Brennan alleged he was denied a promotion to the role of New Hampshire team lead because he had spoken about Rice to HR. Boston Beer said he “failed to adequately prepare for the interview” and the candidate who was offered the role “was better prepared.”
However, in his lawsuit, Brennan noted that he “had higher performance reviews” and a longer tenure at the company than the woman who was offered the promotion. Before she took the role, the coworker “directly told me she was not prepared, nor did she have the work ethic or interest in becoming a manager,” Brennan said in an affidavit included with his complaint.
“I believe this was purposely done by Michael Rice to retaliate against me for speaking negatively about him on April 28, 2022, and to allow Boston Beer to state Michael Rice had recently promoted a female employee (which cuts against Katie Fritts’ allegations),” Brennan wrote.
Brennan said his final two months with Boston Beer soured his tenure with the company.
“My future at this company was clearly placed in jeopardy the moment I chose to speak and voice my grievances with Michael Rice and to substantiate claims of discrimination against my coworkers,” Brennan wrote in the complaint. “In return for supporting them, I was retaliated against. This is not what I believed Boston Beer stands for.
“I wanted to dedicate my life and career to this company, and I am heartbroken that Boston Beer – a company I so adamantly believed in – has treated myself and my coworkers this way,” he concluded.
Boston Beer declined to comment on the allegations made against Rice, who did not respond to a request for comment.