Governor Puts Imprimatur on House Version of Non-Compete Bill

Joint Letter Image

Click the image above to read the joint letter from various Massachusetts businesses supporting H.4434 and objecting to S.2418.

By Andrew P. Botti

On Friday, July 22, 2016, the Governor’s office released the following statement concerning the various legislative reform bills recently promulgated by Beacon Hill lawmakers:

“The Governor favors the House version of the non-compete legislation because he believes it better balances workers’ abilities to seek new employment while ensuring cutting edge businesses can protect essential intellectual property. Finding the right compromise on this issue is essential to ensuring innovative businesses want to stay and grow in the Commonwealth.”

As posted earlier, the House bill allows for the continued recognition and enforcement of non-compete agreements. House Bill 4434 also incorporates a version of the Uniform Trade Secrets Act. The Governor’s statement comes on the heels of a July 19, 2016 joint letter sent by various business organizations to various Beacon Hill committee chairs, such as Ways and Means Chairman Brian Dempsey. The letter favors the adoption of H4434 over the Senate version, S2418.

The House version provides that, “A noncompetition agreement may be presumed necessary where the legitimate business interest cannot be adequately protected through an alternative restrictive covenant, including but not limited to a non-solicitation agreement or a non-disclosure or confidentiality agreement.” H4434 limits the non-competition period to 12 months, and must be supported by the payment of a portion of the employee’s salary during the “sit it out period,” or “other mutually-agreed upon consideration” which is specified in the noncompetition agreement.

The House and Senate bills are currently in conference committee. The deadline for producing a compromise bill for the Governor’s consideration is July 31 – the official end of the legislative session.

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