Noncompete “Reform” Movement Marks the Death of an Era

By Andrew P. Botti

As published in the Boston Business Journal (7/26/2018)

I have been practicing law for nearly 30 years and have handled a variety of noncompete cases in our Superior Court system.  We are very lucky in Massachusetts to have a fine, well-balanced and thoughtful judiciary.  In my experience, they take the enforcement of noncompetes very seriously, and will not hesitate to reform or change the agreement if they think it is too harsh or unfair to the departing employee.  This has been the case for well over 200 years now.

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Legislature Fails to Reach Compromise on Non-Compete Bill

By Andrew P. Botti

Although burning the midnight oil last night, a Joint Conference Committee failed to reach agreement on a compromise bill by the established deadline of midnight, July 31.

Among other differences, the House and Senate versions of so-called non-compete reform contained very different “garden leave” provisions.

The House version required 50% pay for a one year “sit it out” period, while the Senate version required 100% pay for a maximum 3 month non-compete period. The House version also allowed the parties to come up with another form of acceptable consideration to support the non-compete period.

The Governor indicated that he favored the House version of the proposed reform.

At this point, the issue of non-compete reform is off the table until January 2017, the start of the next legislative session on Beacon Hill.

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.”

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Mass House Votes to Pass Noncompete Reform Bill

By Andrew P. Botti

Last week the Massachusetts House of Representatives voted 149-0 to change the long-standing common law concerning non-compete agreements. The bill voted on – HO 4434 – requires employers to pay 50 percent of a former employee’s salary during the non-compete period, or “other mutually-agreed upon consideration between the employer and the employee.” This 50 percent formulation – and the required payment for a non-compete “sit-it-out” period – does not exist in any other state. The bill also prohibits non-compete enforcement against “employees that have been terminated without cause or laid off[.]” The maximum restriction period is 12 months.

While the passage of HO 4434 does not yet make the bill law, the unanimous vote in favor does not augur well for those who would prefer to keep the present law as it currently exists, i.e., common law recognizing the importance of a private contract between private parties. The Senate has yet to act on the formulation set forth in HO 4434, thus no final formulation has landed on the Governor’s desk for review.

Bill H 1701

Non Compete Act thumbnail

Massachusetts Noncompetition Agreement Act

By Andrew P. Botti

Out of the Joint Committee on Labor and Workforce Development has come the proposed “Massachusetts Noncompetition Agreement Act,” which would be an amendment to Chapter 149 of the General Laws.

The major provisions are as follows:

  • the non-compete must be provided to the employee with a formal offer of employment or 10 days before employment, whichever is earliest;
  • restrictive period of no more than 12 months;
  • requires that the non-compete contain a garden leave clause such that the employee will be paid for the duration of the restrictive period;
  • prohibits enforcement of non-competes against certain types  of workers including those classified as nonexempt under FLSA, as well as employees that have been terminated without cause or laid off.

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