In January, Massachusetts State Representative William Brownsberger filed a bill which would seek to void any contract that restricts an employee’s ability to search for and obtain another position with a different employer. While this bill has gained some support, it is unclear whether this will resolve the issues regarding non-compete agreements in Massachusetts. The Smaller Business Association of New England is working with Representative Brownsberger to draft a compromise bill which would limit who can be covered and the duration for which the agreements can last.
With the pending legislation in Massachusetts to do away with non-compete agreements, both sides are struggling to find the solution to the problem. The question is: How can Massachusetts make itself more attractive to the tech community? Is the answer to do away with non-compete agreements or to simply modify them and restrict their duration and scope?
Supporters of the current Massachusetts laws regarding non-compete agreements argue that such agreements foster competitiveness between companies, prevent confidential information from being shared, and protect business relationships which may be hurt when an employee leaves a company. Many large companies believe that non-competes are essential to attracting employees. Such employers argue that non-competes are voluntary in that they are not required by all companies and employees are not required to sign them although refusing to sign may result in a potential employee not being hired.
Opponents of non-competes believe that such agreements are restricting the growth of the tech industry in Massachusetts because they make it more difficult for employees to move between companies, thereby encouraging employees to take positions with larger companies to the detriment of smaller start-ups. Additionally, opponents argue that employees gain more knowledge and experience as they change positions and move from company to company. Further, opponents believe that the elimination of non-competes will make Massachusetts a competitor with Silicon Valley and will encourage the start-up of tech companies in Massachusetts.
For now, the question still remains: Will the elimination or modification of non-compete agreements in Massachusetts make the state a better, more attractive location for the tech industry and help to boost the economy or will it diminish competitiveness between companies? Public hearings for Representative Brownsberger’s bill are scheduled for sometime this fall, during which we expect these questions and many others to be addressed. We intend to follow the legislation and report on its progress in this blog.