Non-Competes are not enforceable in California. Will Massachusetts soon join that club? Massachusetts Joint Committee on Labor and Workforce Development will hold a hearing on October 7, 2009 to discuss a bill that would limit the scope of non-competes.
Original Version of Non-Compete Bill
The Massachusetts bill started out very simply. In its original form, it prohibited non-competes by amending Chapter 149 of the General Laws of Massachusetts with the addition of the following language:
Any written or oral contract or agreement arising out of an employment relationship that prohibits, impairs, restrains, restricts, or places any condition on, a person's ability to seek, engage in or accept any type of employment or independent contractor work, for any period of time after an employment relationship has ended, shall be void and unenforceable with respect to that restriction.
Current Version Adds Complications
State representatives have backed off of eliminating non-competes in their entirety and now seek to limit their scope. The result is a much more complicated bill. Here are some of the provisions that struck me as most interesting as I skimmed through the bill:
- Effective Date. If passed, the law would apply to non-competes entered into after January 1, 2010
- Minimum Salary Required. Non-competes would not be enforceable against employees earning less than $75,000
- Notice Required. If a new employee is required to sign a non-compete as a condition of employment, the employer must give the employee a copy of the non-compete agreement at least seven business days before employment begins.
- Limit on Duration. Non-compete restrictions can last no longer than one year after cessation of employment. The exception is a garden leave clause that allows the non-compete restrictions to last up to two years. The garden leave clause requires the employer to pay the former employee at least $50,000 during each of the years the former employee is not competing with the employer.
- Collection of Legal Fees. If an employer sues an employee to enforce a non-compete agreement and the court ultimately finds that the non-compete is inconsistent with the law, the employer will have to pay the employee’s legal fees.
- No Impact on Covenants Not to Solicit. If passed, the new law would not apply to or alter covenants not to solicit employees or customers of the employer or to restrictive covenants made in connection with the sale of a business or the assets of a business
For More Information and Commentary
Massachusetts’ state representative Will Brownsberger, who co-introduced the bill, describes the history of the bill and provides a link to the current version of the bill on his blog.
Boston.com offers an article by Scott Skirsner entitled Dear Captains of Industry: Where Is the Data to Support Your Position on Non-Competes? Skirsner advocates the demise of non-competes in Massachusetts and provides links to sources supporting the argument that non-competes hurt the state economy and make it less competitive.
Are IC's included in the new bill passing Jan 1, 2010 in Massachusetts. For example, I work for a company operating in Massachusetts, an LLC, as an Independent Contractor. If at any time I give written notice that I wish to terminate the contract, is a 24 month no compete with competitors enforcable? Not clients, but competitors.
Posted by: Tony | December 31, 2009 at 12:34 PM