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More MA Legislative Developments in Trade Secrets and Non-Competes
On April 29, the Massachusetts Legislature’s Joint Committee on Labor and Workforce Development favorably reported out a bill which would enact a version of the Uniform Trade Secrets Act (“UTSA”) coupled with a ban on non-competition agreements in Massachusetts. The bill is quite similar to the Patrick Bill we described in our April 15, 2014 Employment Law Alert. This marks the first time that the Joint Committee has favorably reported out a bill to the legislature that would regulate non-competition agreements in the Commonwealth. The current legislative session ends as of July 31, so it remains to be seen if the legislature will take any action on the new bill.
For more information on this topic, please contact Chris Perry.
Patrick Administration Seeks to Ban Non-Compete Agreements
During the past several years, there have been various legislative initiatives in Massachusetts which, if successful, would have regulated and/or curtailed the use by employers of non-competition agreements. On September 10, 2013, in testimony before the Massachusetts Legislature’s Joint Committee on Labor and Workforce Development, Gregory Bialecki, Governor Patrick’s Secretary of Housing and Workforce Development, testified that the Patrick Administration supports the “outright elimination of enforceability” of all non-compete agreements in Massachusetts, regardless of duration or geographic scope. Secretary Bialecki’s testimony finally confirmed publicly what many assumed was the Patrick Administration’s position on this controversial subject.
Last Thursday, the Patrick Administration took a bigger step towards its goal of eliminating non-compete agreements by way of an economic stimulus bill that includes a proposed new Chapter 93K to enact the Uniform Trade Secrets Act (“UTSA”) in Massachusetts. The proposed Chapter also includes a provision which would render “void and unenforceable” any non-compete agreement with an employee or independent contractor.
For more information on what this means for employers, please see the full Alert.
If you have any questions, please feel free to contact a member of MBBP’s Employment Law Group.
Governor Patrick Administration Supports “Outright Elimination” of Non-Compete Agreement Enforceability
By: Bob Shea
In testimony before the Joint Committee on Labor and Workforce Department on September 10, Gregory Bialecki, Governor Deval Patrick’s Secretary of Housing and Economic Development, stated that the Patrick Administration now supports the outright elimination of the enforceability of non-competition agreements in Massachusetts. Secretary Bialecki stated that a ban on non-competes should be combined with the adoption of the Uniform Trade Secrets Act (“UTSA”) to protect against the potential loss or disclosure of proprietary information by departing employees.
Secretary Bialecki testified that Massachusetts “should do everything it can to (1) retain talented entrepreneurs; (2) support individual career growth and flexibility; and (3) encourage new innovative businesses that are the engines of economic growth.” According to Bialecki, non-competes “stifle movement and inhibit competition” and, as a result, “we are not seeing the kind of spin-offs and start-ups at the same rate that previously made Massachusetts an enviable model.”
Secretary Bialecki testified that Massachusetts should adopt the USTA, as 47 other states have done. He said that the UTSA “and other tools protect an employer’s trade secrets and proprietary information,” and that, “[e]ven without non-compete agreements, companies still have a disproportionate ability to litigate against the individual.”
There are three pending non-compete bills before the Massachusetts legislature. Two bills would create a presumption that non-competes lasting more than 6 months are unenforceable. One bill would ban non-competes in Massachusetts altogether. At this point, however, any legislative effort to restrict the use of non-competes faces a tough battle. Still, the Patrick Administration’s decision to support a ban on non-competes may be a turning point in the debate.
You may contact a member of MBBP’s Employment Law Group for more information.
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