Senate Version of Non-Compete Reform Bill Differs Substantially From House Version

By Andrew P. Botti

On July 11, 2016, the State Senate promulgated its version of so-called non-compete reform legislation in S2418, which would amend Chapter 149 of the General Laws governing Labor and Industries.

The Senate version states that the non-compete period “shall not be more than 3 months from the date of termination of employment[.]” Currently, the law recognizes and allows for restrictive periods up to two years. The Senate version also contains a requirement that the employer notify the employee in writing within 10 days of termination that it intends to enforce the non-compete, or the non-compete is considered void. Perhaps most striking is the requirement that during the “sit it out” non-compete period, the employer is required to pay the employee “100 percent of the employee’s highest annualized earnings paid by the employer within the two years preceding the employee’s termination[.]”

Both the House and Senate versions of the proposed reform legislation must now go to conference committee to see if compromises can be reached on the differing provisions. Any such reconciliation must be accomplished prior to July 31, 2016, the end of the current legislative session.

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