As reported in The Boston Globe, the Massachusetts Senate and House concluded their legislative session on July 31, 2016, without passing noncompete reform legislation. This comes as a bit of a surprise as the House and Senate have in 2016 each passed a noncompete reform bill. Additionally, Governor Charlie Baker has, through a spokesperson, recently indicated support for the House bill that sought to restrict noncompetes by creating “Garden Leave,” consisting of payment during the restricted period of at least 50 percent of the employee’s annualized base salary. However, for those who have followed this process over the years, the fact that neither bill passed is consistent with many other failed attempts over the years to overhaul the Massachusetts noncompete landscape.
Thus, the noncompete reform debate, which has been ongoing in the Massachusetts legislature since at least 2009, continues. We will keep you updated.
What This Means for Employers
Employers may want to monitor any proposed legislation in the next session and consult with legal counsel to ensure that any restrictive covenants that are drafted meet all requirements for enforcement under Massachusetts law. Employers should also review with legal counsel other ways to protect trade secrets and customer good will, whether by way of confidentiality or non-solicitation agreements or other protections.