Governor Revises Proposed Bill to Restrict Noncompetition Agreements

Though his proposal to ban noncompetition agreements in Massachusetts died in the state legislature over the summer, Governor Deval Patrick still hopes to enact a state law restricting their use. This time, the Governor is seeking to more strictly regulate noncompetition contracts by requiring, among other things, that they be proposed in writing to prospective employees at the time a job offer is made.

The Governor’s push to restrict noncompetition agreements is motivated by concerns over the negative impacts they sometimes have on economic growth. “Providing the talent needed to support the kind of growth we want and need is considerably more difficult if employees are legally unable to move between jobs in the innovation economy,” the Governor wrote in a letter to legislators that accompanied his revised proposal on August 13. Once again, Mr. Patrick’s bill was referred to committee for evaluation. The Governor’s first noncompetition proposal, which sought to ban the agreements altogether while retaining employers’ abilities to protect important interests, was never acted upon by either the state senate or house of representatives.

The new bill is House 4401. In addition to delivering advance notice, it would require employers to provide employees an opportunity to consult with counsel prior to signing a noncompetition agreement. When forms are used with current employees, the proposal requires that something other than continued employment  be given to them and that they have 10 business days to consider competitive restrictions before they sign them. The Governor’s bill also includes restrictions on the bases for enforcing noncompetition agreements that are consistent with current law. The modified proposal is the product of interactions with business leaders and others that the Governor engaged in after his first bill was filed.