Latest on the Non-Compete Bill in Massachusetts

I don't intend to turn this into the "all non-compete, all-the-time" blog -- but there's a lot of action on that front right now...

Next week is the Symposium on Bills Affecting Employee Non-Compete Agreements at the Boston Bar Association. (I'll be there.) State Rep. Will Brownsberger will be talking about the latest version of the bill on non-competes -- essentially, his proposal to eliminate non-competes entirely has been combined with another State Rep's proposal to simply limit the way they are used.

Here's his summary of what's in the new, combined bill (you can find the complete language of the bill here.):

Overview of current working draft of non-compete legislation
(combining House 1794 and House 1799, bills filed by Rep's. Brownsberger and Ehrlich)

Motivation:

To protect employees from unfair non-competition agreements while preserving protections for legitimate risks to business assets.

Basic Approach:

Prohibit non-compete agreements for lower level employees; for others, allow non-compete agreements but clarify guidelines and give employers strong incentives to require only moderate and reasonable agreements.

Key Elements:

- Create procedural protections for all employees

- Agreements must be in writing
- Employers making job offers must give early notice that a non-competition agreement will be required, in time for a prospective employee to assess his or her options and decline the job offer before resigning their present job.


- Clarify common law rules that, to be enforceable, non-competition agreements must be necessary to protect trade secrets, confidential information or good will and must be consonant with public policy and reasonable in duration, geographic scope and proscription of activities

- Limit term of agreements to one year (unless garden leave payments of at least 50% of total compensation are made, in which case agreements may last two years).

- Make non-compete agreements unenforceable against employees making under $50,000 and enforceable only to protect trade secrets or confidential information (but not for goodwill) for employees between $50,000 and $100,000.

- Create safe harbors for very moderate agreements -- giving employers incentives to choose agreements meeting those terms:

- Six month agreements prohibiting activities of the type the employee was actually engaged in within the geographic area that they were working in.
- Garden leave agreements supported by adequate compensation (greater of $50,000 or 50% of total compensation).


- Punish overreaching by employers by awarding attorneys fees to the employee whenever an agreement is reformed or found unenforceable and was not within one of the safe harbors.

- Otherwise preserving existing law

- Preserve existing common law defenses for employees facing enforcement actions
- Not applying new rules to business purchases, covenants not to solicit employers' customers, etc.


- Effective as to agreements entered on or after January 1, 2010

Welcoming your thoughts...