Once again, the Massachusetts legislature took on non-compete reform, and once again, came up empty-handed. On July 31, 2016, the legislature adjourned without reaching a compromise to alter the state’s non-compete landscape. Earlier this summer, both the House and the Senate passed contrasting versions of non-compete reform bills, but ultimately could not come to agreement on several important provisions. Their inability to reach a compromise reveals once again that this is a complex issue with many stakeholders, and not one susceptible to end-of-the-session compromise.
While similar in some respects, the Senate bill greatly differed from the bill previously passed by the House on four key points:
- The Senate version limited the length of a non-compete’s restricted period to three months, while the House version’s was twelve months.
- The Senate version expanded the House’s (already extensive) list of individuals exempt from non-compete agreements to independent contractors and employees whose average weekly earnings are less than twice the average weekly wage in the Commonwealth.
- The Senate version’s “garden leave” clause required payment to the employee during the restricted period to be equal or greater to 100% of the employee’s highest annualized earnings during the last two years of employment, while the House version required payment of 50% of the employee’s highest annualized base salary over the last two years, or other “mutually agreed upon consideration.”
- In what would have been a dramatic change to current Massachusetts non-compete law, the Senate version did not permit “blue-penciling” -- a court’s equitable reformation of overbroad non-compete provisions -- while the House version did.
Those following the Massachusetts legislature’s repeated, unsuccessful efforts at non-compete changes will have to wait until next year, as the next legislative session does not begin until January 2017.
Christopher H. Lindstrom is a partner in Nutter’s Litigation Department and a member in the firm’s Labor, Employment and Benefits practice group. Clients rely on Chris’ broad experience in complex civil litigation matters ...
Emily Grannon Fox is an associate in Nutter’s Litigation Department and a member of the firm’s Labor, Employment and Benefits practice group. Clients frequently turn to Emily for representation in complex civil litigation ...
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