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Compromise Bill Preserves Non-Compete Agreements

Posted by John Regan on Jul 31, 2014 10:13:00 AM

Massachusetts employers would retain the ability to protect their intellectual property through the use of non-compete agreements and would gain access to an expanded research and development tax credit under an economic development bill approved by the Legislature early today.

intellectualpropertysmallLawmakers approved the measure on the final day of formal sessions for the 2013-2014 legislative session. Associated Industries of Massachusetts called upon Governor Deval Patrick to sign the bill.

The Senate bill had included restrictions on the use of non-competes in an earlier versio nof the bill, but a conference committee ultimately adopted the approach of the House and made no changes in the law governing the agreements.

Legislators also declined to adopt a Senate version of the Uniform Trade Secrets Act that would make defense of intellectual property and trade secrets nearly impossible.

The bill would expand research and development tax credit by allowing employers the option to claim a credit equal to 10 percent of any research expenses that exceed a base amount calculated over a period of three years. Associated Industries of Massachusetts continues to study the specifics of the proposal in advance of today’s debate.

“Speaker DeLeo, Senate President Murray and the Legislature deserve tremendous credit for recognizing that the current law governing non-compete agreements in Massachusetts is working just fine,” said Richard C. Lord, President and Chief Executive Officer of AIM.

“The 4,500 member employers of AIM urge Governor Patrick to sign this prudent approach.”

The decision to maintain the current non-compete law came after hundreds of AIM member employers contacted members of the Legislature to underscore the importance of protecting the innovations that drive the Massachusetts economy. AIM members from every sector of the economy, from technology to manufacturing, expressed overwhelming support for keeping the law as is.

The Patrick administration and a coalition of venture capitalists have sought for more than a year to ban non-competes altogether, arguing that they inhibit the growth of new companies in the innovation economy. The Senate economic development bill that passed on July 1 contained a provision that would have prohibited employers from using non-compete agreements with hourly employees and limited the length of non-competes to six months.

The compromise economic development bill also includes a $15 million middle skills jobs training grant fund, $10 million for brownfields redevelopment, efforts to boost jobs in so-called Gateway Cities and a Big Data Innovation and Workforce Fund. A sales tax holiday is authorized for August 16 and 17.

Topics: Massachusetts Legislature, Non-Compete Agreements, Intellectual Property

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