Massachusetts Takes Steps Toward Non-Compete Reform

SPRINGFIELD, WORCESTER, Mass. – Skoler, Abbott & Presser, P.C., the leading labor and employment law firm serving employers in the greater Springfield area, urges business owners to contact their state senator today in opposition of the non-compete reform bill that was recently passed by the Massachusetts House of Representatives. This bill is viewed by many as a compromise between the business community and trade associations and passed by a unanimous vote late last week. The bill would limit non-compete agreements to one year from the final day of employment.

Under the proposed legislation, in order to be enforceable, a non-compete must be “no broader than necessary” to protect legitimate business interests and must be “reasonable in geographic reach.”  These provisions mirror existing case law interpreting non-compete agreements, but another portion of the bill – known as the “garden leave” provision – requires employers to pay departing employees half their salary during the post-employment non-compete period or some other agreed-upon amount of money (failure to do so would make the agreement unenforceable).  It also requires employers to compensate employees who sign non-compete agreements during the course of their employment and mandates a waiting period before an employee or applicant can be required to sign a non-compete agreement.

“There is no doubt that this reform will have huge implications on employers here in Massachusetts,” said Attorney John S. Gannon. “Even though the bill protects anti-solicitation, anti-recruitment and nondisclosure agreements, there are still provisions of the legislation that will adversely affect employers who execute agreements on or after October 1, 2016. I encourage all business owners to contact their legislators, including the Governor’s office, today to express their disapproval of this new reform.”

The legislation will now move on to the Massachusetts Senate. The senate can approve the bill as is, pass with changes or reject the bill. Several adjustments would need to be made before sending the legislation to Governor Baker for his signature; the governor has yet to take a position on non-compete agreements and reform.

For more information on non-compete agreements and this reform, visit skoler-abbott.com or call 413-737-4753.