For years, I have been writing about the continuing efforts of legislators and others to reform the Massachusetts trade secret and non-compete law (see, e.g., my previous blog posts here and here). In this legislative session, Governor Patrick surprised many by submitting a bill that would, with some exceptions, make non-competes unenforceable in Massachusetts (much like the law in California), in an effort to encourage spin-offs, primarily in the high tech area, to compete more effectively with competitors in other states. There was also an effort for Massachusetts to adapt the Uniform Trade Secrets Act (“UTSA”), a federal law adopted by 48 other states. (Only New York and Massachusetts have not adopted the UTSA). There were also “compromise” bills that sought to codify the non-compete law in Massachusetts in many ways, including: a) banning the use of non-competes for non-exempt workers; b) requiring advance notice and consideration for those who are required to sign a non-compete after starting employment; and c) creating presumptions addressing the reasonableness of the duration of the non-compete obligation and the scope of the activities that would be prohibited.
Although there have been bills introduced in the Massachusetts legislature aimed at reforming the trade secret and non-compete laws in Massachusetts for years without success, I thought that this year, a compromise bill would pass. I was wrong. None of the bills introduced in this year’s Legislative session became law. The reason for my view that there would be some type of compromise bill passed was that many companies and attorneys were attracted to those provisions in the bills that would have given businesses guidance on the enforceability of restrictive covenants they required their employees to sign, as well as on the enforceability of any restrictive covenants that companies might have to comply with upon hiring someone subject to one. Many who blog on this subject, including me, believe that there will continue to be legislation on this subject proposed in the next legislative session.
We will keep you posted.