On Thursday, July 14, 2016, the Massachusetts Senate debated, and passed, its own version of non-competition reform. It differs in important ways from the bill approved on June 29, 2016, by the House of Representatives. (Please see our alert dated July 1, 2016, explaining the key provisions of the House bill.) The legislation will now be referred to a conference committee to work out the differences. The stated goal of the legislature is to pass a compromise bill before the legislature adjourns for its summer vacation. Given the key differences, it is not clear whether a compromise can be reached.
In a number of respects, the Senate bill is more employee-friendly than the House counterpart:
The points of agreement between the Senate and House bills are many, and significant. Most important: both houses agree that non-exempt employees and independent contractors cannot be restricted by non-competition agreements, leaving large (and increasing) numbers of employees totally free from such restrictions; both houses agree that employees who are terminated without cause or as part of a reduction in force cannot be subject to non-competition restrictions; and the law will apply if enacted, to agreements entered into on and after October 1, 2016.
As we pointed out in our earlier alert, this major change in the employment law of Massachusetts, if enacted, will require Massachusetts employers (including out-of-state employers that employ Massachusetts residents) to rethink noncompetition terms for new employees and/or existing employees who may become subject to new agreements, their hiring practices and how they are going to protect trade secrets, confidential information and company goodwill from misuse and misappropriation by departed employees. Members of Nixon Peabody’s Labor and Employment group will continue to keep you updated on legislative developments and are available to assist employers with these and other labor and employment matters.
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.