According to the author, Attorney Michael Bunis,
Governor Patrick proposed a legislative package that would eliminate non-compete agreements, on the condition that Massachusetts adopt the Uniform Trade Secrets Act, among other provisions. The debate in Massachusetts over non-compete agreements has been ongoing for several years, and a bill proposing a limit on the duration of non-compete agreements to six months is currently pending in the State Senate. Governor Patrick’s outspoken support of eliminating non-compete agreements is a relatively recent development, however. In its current form, Governor Patrick’s bill would invalidate any non-compete agreement or non-compete provision of an employment agreement, regardless of duration. The bill would also adopt the Uniform Trade Secrets Act’s provisions. The bill would still explicitly permit non-solicitation provisions, non-disclosure agreements, and non-compete agreements made in connection with asset sales (limited to employees with at least a 10% ownership interest in the company being sold). The bill would also allow “forfeiture agreements” pursuant to which employees would receive additional compensation in return for an agreement not to compete. Under such agreements, if the employee chose to compete, he or she would forfeit the additional compensation.
Mr. Bunis does a great job of telling his corporate clients how they should prepare for this possible change. I neither dispute his advice, or his perspective.
Rather, I share his article with you only to again make that point that each state law differs a great deal on how it examines the validity of these contracts. In one Commonwealth, they are close to being invalidated by state statute. In our Commonwealth, Virginia, there is no code provision that addresses their validity and we are left with the common law that upholds reasonable, narrowly tailored prohibitions to competition as defined by the Courts on a case by case basis.
Start a business in Mass and you won’t be able to bind future employees. At least, it looks unlikely. Start one in Virginia and you will need a well written, detailed and specific contract that prohibits employees from doing the same or similar job for a competitor. Not sure if your contract fits that small mold? We would be happy to evaluate it on your behalf.
Go Red Sox! Go Gov. Patrick! Go states making pro-business decisions that benefit capitalism and not just employment lawyers.