2013 Noncompete Reform Effort Will Focus on Durational Limits

The Massachusetts legislature has begun a new, two-year session, and with it comes a pared-down approach to reforming the law of noncompetition agreements in the Commonwealth.  The two principal sponsors of past reform legislation, Senator (previously Rep.) Will Brownsberger and Rep. Lori Erhlich, explained in a recent Boston Business Journal piece that they are introducing a new bill intended to address objections from smaller businesses about attorney’s fees shifting provisions in the previous bill.  Thus, they explained, they are focusing their efforts on a simpler bill:

In the version that we will file this year, we have sought to simplify our approach, focusing on a single dimension — the term of the noncompete agreement. Our proposal is that agreements with a term of longer than six months would be presumed unreasonable. That leaves some flexibility for an employer to persuade a court that a longer term is reasonable. However, if an agreement with a term longer than six months is found unreasonable, it would be unenforceable, not reformable, except in cases of very high earning employees and in cases of actual theft of assets.

Attorney Russell Beck, who has been working with Sen. Brownsberger and Rep. Ehrlich since 2009 on various iterations of the legislation, provides on his excellent blog some additional historical background and detail on the new, streamlined bill (a copy of which is not yet available).

The current status of the debate is very interesting.  In the face of consistent objections from significant voices in the business community (AIM, SBANE and others), the principal reform position has retreated from one of overt hostility to noncompete agreements altogether (with a proposal to follow the California model), to a comprehensive approach intended to address both “due process” and substantive aspects of the noncompete landscape while permitting noncompetes to be enforced, to a simpler approach that seeks to limit the duration of noncompetes to six-month in most cases.  At the same time, the Governor’s office, the Boston Globe and others significant voices continue to express the view that noncompetes are bad for the long-term health of the Massachusetts economy.

It will be interesting to watch how the debate unfolds in the next two years.

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