In this latest Legislative session on Beacon Hill it appears that the House and the Senate have reached certain compromises concerning non-compete legislation which would alter considerably the existing non-compete legal landscape in Massachusetts. The new version of the bill – HO 4434 – would alter Chapter 149 of the General Laws and provide generally as follows:
- If entered into in commencement with the start of employment, it must be in writing and signed by both parties. It must expressly state that the employee has the right to consult with counsel prior to signing.
- To remain enforceable, the agreement must be reviewed with the employee not less than once every 3 years.
- The maximum restrictive period post-employment is 12 months from the date of termination of employment
- The geographic scope should be limited only to those areas in which, during the last two years of employment, the employee provided services or had a material presence.
- The post-employment restriction should be limited only to those types of services provided by the employee during the last 2 years of employment.
- If the employer intends to enforce the agreement, it must notify the employee by certified mail no later than 10 business days after termination.
- During the non-compete period the employee must pay the employer for “sitting out” according to a specified formula.
- The non-compete agreement is not enforceable against someone who has been terminated without cause or laid off.
The Bill contains other changes to the current law, but these are the major revisions. It is unclear at this point when exactly the bill will be put to a vote in the
House and the Senate. During the last legislative session, the proposed reform bill went into Conference Committee during the final days, but a compromise was not reached.