MA Noncompete Bill Deferred to Next Year

Although the Massachusetts noncompete bill had made substantial progress since its introduction, many more pressing issues in need of urgent legislative attention took priority, leaving the bill stalled toward the end of the legislative session (ending today, July 31). It is thus now fair to report with certainty that the bill is dead for this legislative session.

Questions have already arisen about what will happen next year. The answer: it will likely be reintroduced, but with modifications based on input that had been solicited and received from many different quarters.

Recap of the bill’s progress through last session:

Two noncompete bills were introduced in December of 2008, one by Representative Will Brownsberger and the other by Representative Lori Ehrlich. The Brownsberger Bill would have aligned Massachusetts with California, banning employee noncompetes entirely. The Ehrlich Bill took a different approach, primarily imposing certain notice requirements and an income threshold so that employees earning under a certain amount would not be subject to noncompetes at all.

By the spring of 2009, the two reps had worked extensively together – soliciting input from many people, reflecting many divergent interests – to design a compromise bill that would balance the needs of employers large and small with those of the employees, from the most highly paid and sophisticated to the least.

Over the course of the next year, the two reps and others involved in the process (I was the lead drafter of and advisor on the original Ehrlich Bill and continued in that role for the compromise bill) solicited – and received – some extremely constructive suggestions for ways to improve the bill. As the process went on, it quickly became clear that for every change that might be made, someone might want the language back the way it was. By way of example, early on, a number of the people we heard from opposed the use of garden leave clauses. Based on what we were hearing, the garden leave option was removed. Later, as we heard from more people and as people came to understand the benefits of a garden leave option – and, in particular, that their use was not mandatory, it seemed likely that the garden leave clause would make its way back in.

While that education/investigation process continued, in March of this year, the bill was favorably reported out of committee and, on May 25, was submitted to the Judiciary Committee for its consideration. Most recently, it (along with various other bills) was attached to part of an economic development bill. Although the economic bill passed in the house, several of the attached bills – including the noncompete bill – were removed. As a result, the bill would not pass this year.

Future of the bill:

The bill has received a substantial positive response. Although reports vary as to the level of opposition, most of the opposition focuses not on the bill’s fundamental purpose, but rather, on certain aspects of the bill. Those aspects are primarily the $75,000 income requirement for someone to be bound by a noncompete and the ability for a former employee to recover legal fees. Accordingly, the bill will almost certainly be reintroduced in the next session with some modifications based on the input already received and other input still being sought.

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