Bill to Abolish Non-Competes in Massachusetts is Filed

As expected (and first discussed here), Massachusetts Rep. Will Brownsberger has introduced a bill that would abolish the use of noncompete agreements in Massachusetts, at least in the employment and independent contractor contexts.  Here is the text of the proposed law:

AN ACT TO PROHIBIT RESTRICTIVE EMPLOYMENT COVENANTS

Section 1. Section 19 of Chapter 149 of the General Laws of Massachusetts is hereby amended by inserting at the end the following new paragraphs:

Any written or oral contract or agreement arising out of an employment relationship that prohibits, impairs, restrains, restricts, or places any condition on, a person’s ability to seek, engage in or accept any type of employment or independent contractor work, for any period of time after an employment relationship has ended, shall be void and unenforceable with respect to that restriction. This section shall not render void or unenforceable the remainder of the contract or agreement.

For the purposes of this section, chapter 149, section 148B shall control the definition of employment.

Whoever violates the provisions of this section shall be liable for reasonable attorneys fees and costs associated with litigation of an affected employee or individual.

This section shall be construed liberally for the accomplishment of its purposes, and no other provision of the General Laws shall be construed in a manner that would limit its coverage. Nothing in this section shall preempt tort or contract claims, or other statutory claims, based upon an employer’s use, or attempted use of an unlawful contract or agreement to interfere with subsequent employment or contractor work.

This section shall apply to all contracts and agreements generated after the effective date of this act.

Section 2. Section 42A of Chapter 93 of the General Laws of Massachusetts is hereby amended by striking the words ‘in violation of the terms of such agreement’ where they first appear.

As drafted, the bill would prohibit all noncompetes generated in the employment context after its effective date, presumably leaving enforceable those agreements previously executed.  It also appears to be intended to leave unchanged the common law principles applicable to noncompetes in the sale of business context.

The sentence stating that the law would not “render void or unenforceable the remainder of the contract or agreement”  may be intended to allow for continued enforcement of non-disclosure and non-solicitation covenants, but if that is the intent it is not entirely clear.  Many of the vocal opponents of noncompetes have indicated they would favor continued enforcement of employee and customer non-solicitation restrictions.  However, the legislation, as drafted, could be read to encompass at least customer non-solicitation clauses, as it might be argued that such clauses impair the employment relationship.  In any event, some clarification might be necessary on this point.

Any employer that violates the new law – presumably by either requiring an employee to sign a prohibited noncompete or attempting to enforce such an agreement — would be liable for the employee’s attorneys’ fees incurred in litigating the issue.  And the law specifically opens the door to other actions — such as unfair business claims under Chapter 93A — that could provide for multiple damages based on an employer’s violation.

As reported in Xconomy, Senator Patricia Jehlen will sponsor a Senate version of the bill.  The House version is expected to be referred to the House Committee on Labor and Workforce Development, which likely will hold a hearing on the subject this spring.   It will be interesting to see how the Massachusetts business community reacts to this proposal.

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