Massachusetts has long tried to pass legislation regarding non-compete laws with no real success. Many in the venture community believe California’s fluidity in allowing employees to be unencumbered by non-compete law, help drive entrepreneurship and innovation. In particular, an example offered is that Silicon Valley thrived while Rt 128 declined. Duval Patrick tried to work on this in 2014 with no luck but Charlie Baker signed a new piece of legislation that goes into effect Oct 1.
The good news is that it makes some changes to Mass current law but the bad news is that it is still restrictive compared to California. As a non-lawyer, I have written about non-competes before but here are some of the highlights for the new Massachusetts legislation effective Oct 1:
Not retroactive: Unfortunately, if you signed a non-compete before Oct 1, 2018, it will still be in force.
One year limitation: No longer is it possible to impose a restricted period for more than one year.
Terminated without Cause: Non-competes basically will only be enforceable if an employee voluntarily resigns and can not be enforced if an employee is laid off or terminated without cause.
Garden Leave: This section of the law can be tricky. It basically states that the employer may have to pay 50% of the employee’s salary while the non-compete is in force. But there is wording that adds “mutually agreed upon consideration” which muddies the waters so to speak.
Hourly employees: As of Oct 1, hourly employees will be exempt from non-compete laws which should benefit people like college students and lower-paid hourly workers who are often restricted to working in a small geography.
Presenting and receiving an offer is a very positive step for employers and candidates alike. It is always good to begin discussions with a spirit of collaboration, an attention to detail and an understanding of current laws.