More on the Noncompete Debate

An Op-Ed in last Sunday’s Boston Globe joins the chorus of advocates for noncompete reform in Massachusetts.  The author, Jeremy Hitchock, CEO of New Hampshire-based Dyn, prefers California’s “prohibition” approach (in which employee noncompetes generally aren’t enforceable) , arguing that California’s model  “has created a unique employment ecosystem that thrives on employee movement.”  Conceding that this model “reduces the protection of an individual company’s business know-how,” Hitchcock asserts that “major trade secrets” are adequately protected by the Uniform Trade Secrets Act (UTSA).  Massachusetts has not yet adopted the UTSA, but there is renewed impetus in the legislature to do so now, perhaps coupled with noncompete reform.  Those on the other side of this issue argue that enhanced trade secret protection by itself is not an substitute for the protection provided by enforcement of a noncompete in those instances in which an employee’s defection to a direct competitor places trade secrets immediately at risk.

Hitchock does a nice job of summarizing the state of the debate and current legislative efforts, including the fact that there is far from a consensus within the high technology industry in Massachusets that following the California  model would help recreate the success of Silicon Valley.   He calls for individual companies to be “agents of change” on this issue.  And he concedes that the current proposed legislation — simply limiting noncompetes to six months (in most instances) and otherwise leaving the current law intact — is only a start toward the goal he advocates.

What remains to be seen (at least to this observer) is whether there is even enough momentum to pass the modest legislation currently being proposed.  Certainly Governor Patrick has indicated that he wants reform.  We’ll know in the next six months or so whether it will happen.

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