As you may recall, we recently reported that Massachusetts legislators’ attempts to pass a bill altering the landscape of non-compete enforceability (including Governor Deval Patrick’s bold push to ban non-compete agreements altogether) failed yet again. As has become a nearly perennial event in the Commonwealth, efforts to push legislation through by the close of the session were frenzied, but ultimately much ado about nothing.
Surprisingly, now that the formal legislative session has ended (and before a new one begins next January), Governor Patrick has reintroduced non-compete legislation, although tellingly, this version is much more measured than his previous proposal. Indeed, instead of proposing to ban non-compete agreements altogether, Governor Patrick’s new proposal mirrors the most recent compromise bill introduced by Senator Will Brownsberger and Representative Lori Erlich, which was overwhelmingly approved in the Senate but failed to pass before the end of the session.
To wit, like the previous compromise bill, the newly introduced Patrick bill would require:
(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) that to the extent reasonably feasible, employees be given five business days’ advance notice; and
(c) that 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 bill also creates presumptions of reasonableness as 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). It also bans the use of non-competes for workers classified as nonexempt under the Fair Labor Standards Act (i.e., hourly workers).
Finally, the bill allows courts to reform non-competes only where the provision to be altered is 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”.
It’s unclear what progress will be made on this bill, if any. Now that the formal legislative session has ended, many legislators are focused on their reelection campaigns. No votes will be taken on the bill until next year’s formal session commences in January of 2015, when a whole new crop of legislators will be getting to work – along with a new governor, as Governor Patrick is not running for reelection this year.
Stay tuned for any new developments!