For the past eight years, legislative efforts to reform post-employment noncompetion agreements in Massachusetts have failed. But this year, House Speaker Robert A. DeLeo has signaled his support for H. 4323 and there is buzz that a non-compete bill may
land on Gov. Baker’s desk before the legislative session ends in July.
This bill entitled, “Massachusetts Noncompetition Act” has eight key components in order for a noncompetition agreement to be valid and enforceable. If H. 4323 is enacted, employers will have to quickly and carefully revise their employee restrictive agreements to comply with the new law.
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In a recent decision, a Massachusetts trial court judge decided that a medical practice could not enforce noncompetition and patient nonsolicitation provisions contained in both an employment agreement and an asset purchase agreement against a physician. This case is the first reported instance where a Massachusetts court has voided such restrictions in an asset purchase agreement.
By: Robert M. Shea
Several bills that would restrict the use of noncompete agreements were filed in the Massachusetts legislature in January. Two bills (H.730 and H.2157) filed by Rep. Angelo Puppolo and Rep. Sheila Harrington, respectively, use language similar to the California law that bans most employee noncompetes (as well as nonsolicitation agreements) but permits nondisclosure agreements.
Three other bills take a more limited approach. Two bills (H.2332 and S.809) filed by Rep. Lori Erlich and Sen. Will Brownsberger, respectively, are identical to each other and use language similar to that proposed by Governor Patrick last year. These bills are focused on noncompete agreements and do not seek to ban customer (or employee) nonsolicitation agreements or nondisclosure agreements. The bills also would not affect noncompete agreements already in place (that is, the law would not apply retroactively). Another bill (S.334) filed by Sen. Jason Lewis uses almost the same language but would apply retroactively. A sixth bill (H.709) filed by Rep. Garrett Lewis, uses similar language but could be interpreted as barring not just noncompete agreements but all employee restrictive covenant agreements. It would also apply retroactively.
We will keep clients updated on the proposed legislation. In the meantime, please feel free to contact the Employment Law team with any questions.