Almost nine years in the making, Massachusetts is on the cusp of noncompete reform. And, decades in the making (yes, decades, thanks to Steve Chow‘s extraordinary efforts), Massachusetts is also poised to update its trade secrets laws.
On October 31, the Joint Committee on Labor and Workforce Development will hold a hearing on the eight pending bills to update Massachusetts noncompete laws and trade secrets laws.
Here’s what you need to know…
What bills are being considered?
There are 8 bills in total.
Five of the bills address both noncompetes and trade secrets:
- “An Act relative to the judicial enforcement of noncompetition agreements.” (H. 2366)
- “An Act relative to the judicial enforcement of noncompetition agreements.” (S.988)
- “An Act relative to the judicial enforcement of noncompetition agreements.” (S.1017)
- “An Act relative to regulating trade secrets and noncompetition agreements.” (S.840)
- “An Act to protect trade secrets and eliminate non-compete agreements.” (S.1020)
One addresses only noncompetes:
And, two address only trade secrets:
- “An Act adopting the Federal Uniform Trade Secret Act.” (H.854)
- “An Act making uniform the law regarding trade secrets.” (H.43)
What are the key issues?
Most take a similar approach to the subject area that they cover (trade secrets and/or noncompetes), but differ at the margins. There are, however, two exceptions: One (S.1017) that would limit noncompetes to 3 months and another (S.1020) that would ban them altogether.
While there are many different aspects of the bills that can be compared and contrasted (see “The details” below), the key issues for the noncompete bills (except the bill to ban them) are:
(1) the requirement that an employee be given advance notice that a noncompete will be required;
(2) whether some type of consideration (beyond the continuation of employment) will be required when noncompetes are entered into after employment has commenced;
(3) the maximum duration that a noncompete can last;
(4) what power a court has to fix noncompetes that are drafted too broadly; and
(5) what types of employees should be insulated from noncompetes.
Although they take different approaches on certain of the issues, most of these bills use much of the language from the bills that Senator Will Brownsberger and Representative Lori Ehrlich filed (and of which I am the lead drafter). Accordingly, the differences are primarily the result of different approaches to the issues identified above (and a few others).
The trade secrets bills are much more harmonized, as the differences relate primarily to minor tweaks to the language – although the tweaks can have significant effects.
For example, one of the problems with early versions of the trade secrets bills was that they required a trade secret owner to continue to protect the trade secret even if, as a result of the misappropriation, the secret no longer had any value or, even crazier, if the information has been publicly disclosed. (To see more about this problem and others, see Massachusetts Noncompete Ban and Modified Version of the Uniform Trade Secrets Act Reported Out of Committee.) This problem and some of the other problems still carry forward in some of the bills.
What are the details?
Each of the issues identified above – and several others – is covered in detail in the following two charts:
This chart summarizes each of the noncompete aspects of the 6 bills that address noncompetes.
This chart summaries each of the trade secrets aspects of the 7 bills that address trade secrets.
What are the next steps?
As noted above, the hearing will be held on October 31 at the State House.
See you there!