NEW MASSACHUSETTS BILL: Promoting “Growth and Opportunity” or Poisoning the Business Environment?

On April 10, 2014, Massachusetts Governor Deval Patrick proposed a bill entitled “An Act to Promote Growth and Opportunity.”  Under this lengthy bill, Massachusetts would finally adopt the Uniform Trade Secrets Act, to which only it and New York currently do not adhere.  But the provisions of the bill relating to non-competition agreements are what have received the most attention from the businesses community.

Under the proposed legislation, with the aim of increasing mobility of labor, non-competition agreements between Massachusetts employers and employees or independent contractors would be impermissible and void:

Any written or oral contract or agreement arising out of an employment or independent contractor relationship that prohibits, impairs, restrains, restricts, or places any condition on, a person’s ability to seek, engage in or accept any type of employment or independent contractor work, for any period of time after an employment or independent contractor relationship has ended, shall be void and unenforceable with respect to that restriction.

It is far from certain that this bill will ultimately be enacted into law.  Indeed, over the past several years, numerous bills concerning non-competition agreements have been proposed in Massachusetts, and none has made it farther than committee.  Perhaps this bill will be different.

However, if the governor’s bill passes, it will fundamentally alter the way Massachusetts employers protect trade secrets, as noncompetition agreements have long been one important tool for employers trying to protect their trade secrets.  Could this bill, if enacted, poison the business climate and cause Massachusetts employers to relocate to states that permit the use of non-competition agreements, as many who are critical of the bill suggest?  Or, would Massachusetts businesses continue to thrive even under a ban on non-competition agreements, as many would argue has been the case in California, where non-competition agreements are generally unenforceable by statute?  Time will tell.