OP-ED: State Senator’s Long Effort to Pass Non-Compete Agreement Reform Comes to Fruition

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The following piece was provided by State. Sen. Will Brownsberger, D — Belmont, who represents Watertown:

Ten years ago, a friend in Belmont told me how her career had been derailed by an unfair contract.  She asked for a legislative remedy — not for herself, but to protect others.

I agreed to work with her. The project became a central focus for me across five sessions of the legislature. Finally, last week, the Governor signed legislation limiting the use of “non-competition agreements.” The legislation is not the complete remedy she sought 10 years ago, but it is a big step forward.

She had earned a prestigious advanced degree in a specialized engineering field. In one of her first jobs as a young engineer, she had felt compelled to sign a non-competition agreement with her employer. That agreement prevented her from working in her chosen field for two years. She felt that the gap put her career on the “slow track” which it ultimately never left.

Working with an employment attorney, Robert Mantell, we developed legislation modeled on the 19th-century law in California that outright prohibits the use of non-competition agreements. In Massachusetts, as in the majority of other states, there was no statutory regulation of non-compete agreements — they were regulated entirely by the common law evolved by judges.

When I filed the outright ban proposal in January 2009, it generated a lot of positive interest from other engineers who resented the limitations that their employers had imposed on them.

It also generated interest from some in the venture capital community who argued that non-competition agreements limited their ability to form teams for new ventures. They suggested that California’s prohibition of non-competition agreements was a major reason for California’s dominance in technology entrepreneurship.

I began to feel that my friend had led me to a wonderful proposal — one that would benefit workers and the economy generally at the same time. But then I met with the board of the Small Business Association of New England. Some of the board members were literally shaking with anger as they explained how my legislation would put all that they had worked to build at risk.

They felt that non-competition agreements were an essential device for protecting the ideas that they had developed through great effort. They promised to leave the state if my legislation passed. Their concerns were echoed by some of the larger business organizations — the Associated Industries of Massachusetts and the Greater Boston Chamber of Commerce.

I soon discovered that another colleague, State Representative Lori Ehrlich, had developed legislation working with her own constituent, Russell Beck an attorney and expert on non-competition agreements. That legislation codified the common law of non-competition agreements — allowing them, but regulating them: They should be limited in term and scope and should be only as broad as necessary to reasonably protect legitimate business interests in confidential information, trade secrets or client relationships.

Lori and I began working together to develop a shared approach and met with workers and leaders in many different industries. Over the years of conversation and debate that followed, my conviction deepened that non-competition agreements were being overused in Massachusetts to the detriment of workers and the economy broadly.

But I also learned that non-competition agreements have very different implications in different business settings and are not always unfair. They are a relatively efficient mechanism for protecting business interests as compared to alternative mechanisms like non-solicitation and non-disclosure agreements which can lead to very expensive litigation.

The legislation that became law last week is a hard fought compromise, banning non-competes for lower level workers, limiting them for higher level workers and providing procedural protections to assure that workers know what they are getting into when they sign them.

Read a summary of the legislation on Brownsberger’s website by clicking here.

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