Legislation to revise the law of non-competition agreements took a step forward this week. The Committee on Labor and Human Resources reported out a bill with a favorable recommendation.
Here is the new draft. It is essentially the bill that Representatives Ehrlich and Brownsberger worked out representatives of many interest groups, but we have not yet had the opportunity to study the language carefully. Click here for more background.
Over the next few days, the House Clerk will evaluate the bill to determine the next referral for the bill.
Update on April 27, 2010: The redraft is now formally set as House 4607. It has been referred to the Committee and Steering and Policy which is the last stop before floor consideration of a bill.
Will, please confirm my understanding: Although the posted draft reads (at the end) that the bill will take effect on January 1, 2010, actually, the law if passed would be prospective. That is, existing employee noncompete contracts would not be affected. The date in the bill will be revised (or taken out). The actual date of enactment would be sometime after the governor signs the bill, usually 90 days. This page http://www.mass.gov/legis/lawmkng.htm explains the legislative process.
Correct. Existing non-competes will not be affected. The final bill will have an effective date some time after the enactment date.
It looks better than what I understand the existing law to be, but it’s not as good as what I’ve seen from California. Maybe I misunderstand how California’s law is written/interpreted. I assume that the existence proof of a thriving California tech economy with very minimal non-competes is not motivating enough for Massachusetts legislators.
They should know that at least one Massachusetts citizen has turned down a job (with a Massachusetts company) over an unreasonable non-compete, and will always favor California companies over those that put forth these non-compete agreements that have been proven (by the health of California’s tech economy) to serve no public purpose. These agreements are annoying enough without knowing how things are in California; to know that they are proven-useless is infuriating, and makes me wonder what the heck our legislators think their purpose is.
Will,
I just read the new draft. I think the bill is simple and makes it much clearer for the employee. Thanks very much.
I am unhappy that the bill places a rigid cap of 1 year on all non-competes and eliminates garden leave. It would have been better to eliminate the cap but require that the employer pay dearly for the lost wages during the non-compete enforcement period in excess of the 6 months or 1 year. If there is still room for reintroduction, I’m happy to provide you with specific circumstances where those would be useful.
On the whole, I think the net result is significantly positive. Thanks to Rep. Ehrlich and you and Caroline for driving this to closure.
Thanks,
-amrith
Thanks, Amrith. The garden leave could come back. There wasn’t much enthusiasm for it — few employers seemed interested in doing it. But neither was opposition strong.
We have a good draft, but it is by no means the last word. There can be additional changes as it moves the process.
The goal right now is to get it to move through the process.
Thank you Amrith, and good to hear from you. One argument we heard against the garden leave clause was that it favored big companies over small ones. I.e., only big companies would be able to pay for garden leave and therefore, effectively, big companies could have longer noncompetes.