A Statesmanlike Approach to Non-Competes

Posted by Rick Lord on Jul 25, 2016 7:54:02 AM

The 19th-century British Prime Minister Benjamin Disraeli defined a statesman as “essentially a practical character” who works “to ascertain the needful, and the beneficial, and the most feasible manner in which affairs are to be carried on. 

DeLeo2016.jpgMassachusetts House Speaker Robert DeLeo displayed admirable statesmanship and determination in forging a consensus wage-equity bill under which workers will be fairly compensated regardless of gender while employers retain the ability to design competitive pay plans to attract and retain skilled employees. The bill won unanimous approval Saturday and is now on Governor Charlie Baker's desk.

Now, the speaker is putting his statesman’s hat back on in an effort to pass a compromise bill governing the use of non-compete agreements in Massachusetts. His efforts deserve the full-throated support of the employer community.

You know the non-compete issue by now. AIM has fought relentlessly for several years on behalf the vast majority of Massachusetts employers who wish to preserve the use of non-compete agreements to protect intellectual property. Efforts to ban the use of non-competes have been driven by a small group of well-heeled venture capitalists who cannot seem to master the idea that if you don’t like non-competes, just don’t use them.

Speaker DeLeo, as he did with wage equity, reached out to AIM and other business organizations to understand the concerns that employers had with a possible ban on non-competes. He wanted to limit the use of non-competes with low-income workers, teen-agers, interns and other categories of workers without harming companies seeking to prevent the loss of trade secrets worth millions of dollars.

The result was a compromise bill endorsed by the employer community that would limit non-competes to one year and give employees the opportunity to consult a lawyer when signing a non-compete, but not require companies that compensate employees at the time they sign non-competes to pay them again during the restricted period. The bill passed 149-0.

But the state Senate ignored the speaker’s carefully crafted compromise and passed its own bill with Draconian restrictions that would effectively end of the use of the documents in the Bay State. The Senate measure would limit non-compete agreements to three months and require employers to pay the full salary of the former employee during the restricted period. The bill would exempt anyone earning $130,000 or less from non-competes.

The issue now rests with a conference committee that will attempt to hammer out the differences between the two versions.

But the compromise and statesmanship on non-competes has already taken place. We urge the Senate to recognize the balanced compromise woven by Speaker DeLeo and to adopt the House version of the non-compete bill.

And we're not alone. Baker on Saturday announced that he supports the House bill "because he believes it better balances workers' abilities to seek new employment while ensuring cutting edge businesses can protect essential intellectual property."

AIM urges all its members to contact the conference committee and urge them to adopt the House version.

 Contact the Conference Commiittee

Topics: Employment Law, Non-Compete Agreements, Intellectual Property

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