Many state legislatures spent 2017 tinkering with post-employment covenants. Given the growing trend to legislate locally and the employee mobility issues that seem to nag every employer, we thought the New Year would be a perfect time to review and revisit your post-employment covenants. So for our multi-jurisdictional employers (which seems to be everyone these days), how do your post-employment covenants legally measure up?
On Wednesday, June 29th, the House passed H. 4434: An Act relative to the judicial enforcement of noncompetition agreements, which includes a number of provisions that have long been discussed as the necessary components of non-compete reform.
With so much focus on the reasonableness of restrictive covenants, it’s easy to forget that non-competes are plain old contracts—nothing more. And when it comes to enforcing non-competes, basic contract law still applies.
Written by Andrew Matzkin
At an economic development summit earlier today in Newton, Massachusetts, Governor Patrick stated that he will propose an economic growth bill that includes a prohibition on non-competition agreements that discourage workers in high-tech companies from taking their skills to a competitor. Governor Patrick stated that such agreements move beyond their core importance – protecting company trade secrets and confidential information – and instead unnecessarily stifle competition. “In California, another tech hub, they don’t have non-competes and they’re doing pretty well,” Patrick said in a previous appearance on his monthly radio show. “We want to enable that same free flow of talent in an innovation hub here in Massachusetts which is booming and it ought to have as few restraints on it as possible.” We will provide more details regarding the proposed bill after it is published in full. Currently it appears that the bill will be modeled after California’s analogous regulations, which essentially declare such covenants to be void when based solely on an employment relationship. In turn, Governor Patrick will seek to have Massachusetts adopt the Uniform Trade Secrets Act, which prevents workers from taking companies’ intellectual property to other businesses but leaves them free to join or launch competitors (a large majority of states, including California, have adopted the Uniform Trade Secrets Act). Governor Patrick’s proposal is likely to prompt significant debate in the state legislature. As noted in a Boston Globe piece published earlier today, Governor Patrick appears mindful of the concerns of businesses and lawmakers – the proposed bill would allow businesses to continue limiting certain activities by former employees (such as stealing clients), and would not affect nondisclosure clauses that prevent former employees from publicizing private company matters.