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Trading Secrets A Law Blog on Trade Secrets, Non-Competes, and Computer Fraud

No Massachusetts Non-Compete or Trade Secret Legislation This Year

Posted in Legislation, Non-Compete Enforceability, Trade Secrets

Although, as we have previously reported, the Massachusetts legislature arguably got closer to enacting a non-compete statute this year than ever before ─ which, if Governor Deval Patrick had his druthers, would have banned them outright ─ there will be no new legislation this year according to our sources.   The legislative session ends today.

As we last reported, a compromise bill was overwhelmingly approved by the Massachusetts Senate in early July that would have required:

(a) that non-competes be in writing and signed by both the employee and the employer, and expressly state that the employee has the right to consult with counsel prior to signing;

(b) to the extent reasonably feasible, employees be given five business days’ advance notice; and

(c) if entered into after commencement of employment (but not in connection with a separation agreement), non-competes must be supported by fair and reasonable consideration in addition to continued employment,    and notice must be provided at least ten business days before the agreement is to be effective; and where the non-compete is part of a separation agreement, the employee must be given seven days to rescind acceptance.

The compromise bill also would have established presumptions of reasonableness with respect to duration (6 months), geographic reach (the area in which employee, during the last two years of employment, provided services, or had a material presence or influence), and the scope of proscribed activities (specific types of services provided by the employee during last two years of employment), and it would have banned the use of non-competes for  workers classified as nonexempt under the FLSA (e.g., hourly workers).

Finally, the compromise bill would have permitted courts to reform (or “blue pencil”) non-competes only where provision to be reformed was either presumptively reasonable (as described above) or where the employer made objectively reasonable efforts to draft the particular provision so that it would be presumptively reasonable.

While this bill was supported in the Massachusetts Senate, it will not pass this year.  Likewise, there will be no new legislation enacting the Uniform Trade Secrets Act.

Although non-compete legislation is dead in the water this year, we have no doubt that it will be a hot issue again next year, particularly with the election of a new governor this fall.  We will keep you posted on any developments.