The state of non-competition agreements in Massachusetts
Thirty million Americans are subject to non-competition agreements, called non-competes, with their employers or former employers, according to a recent Treasury Department report. The agreements can often be a serious impediment to those employees' ability to move on from their former employers and find meaningful work in similar industries or geographic areas.
In many cases, employees sign non-competes while things are going well at a job. They read it. They don't love what it seems to suggest. But things are going well; they're happy, and they're not going to worry about the off-chance that down the road that this could affect them.
Then they get laid-off and are reminded about the non-compete they signed several years prior that has a post-employment restriction as to where they are able to work. They may also be handed a severance agreement to review that incorporates the prior non-compete.
While not legal in all states, currently non-competes are permissible as a general matter in Massachusetts. That said, they will only be enforced by the courts in certain circumstances.
There have been a number of bills floating around Beacon Hill for a few years to rein in the negative impact of non-competes on employees' ability to work. And while during the last legislative session both the House and Senate each passed their own versions of non-compete reform, they did not clear the final hurdle to pass a compromise bill before the end of the session in July 2016.
A recent article in the New York Times provided the examples of Massachusetts and California where the former generally permits non-competes while the latter bans them.
California and Massachusetts offer a case study within the high-tech industry. California strictly voids all noncompete agreements. Massachusetts, like most other states, enforces noncompetes. Both California and Massachusetts enjoyed an early boom of economic growth within the high-tech market, but California’s Silicon Valley has continued growing, while Massachusetts has sputtered.
Unlike in Silicon Valley, the employees of the Massachusetts tech companies were bound by noncompete agreements, and the enforcement of those agreements kept out new businesses by preventing people most likely to start new businesses — experienced former employees — from staying in the region. Meanwhile, in Silicon Valley, entrepreneurial activity flourished; thanks to California’s refusal to enforce all noncompetes (including those from other jurisdictions), it remains the tech center of the world.
I regularly speak with employees burdened by non-competes who are in the process of leaving one job in hopes of finding another. If you've had your own experience with non-competes, consider contacting your state legislators to discuss it, hear their views on non-compete reform, and advocate based on your own experience.
For legal advice relating specific to your non-compete, contact me.
Doorways Employment Law is a virtual employment law practice, leveraging the power of technology to connect with clients in the most efficient and convenient way possible. It specializes in employment law counseling, strategic advice and representation to individuals and businesses across Massachusetts, including on non-competition and severance agreements. Contact Doorways Employment Law for an employment law consultation.