Massachusetts has tried on numerous occasions to pass non-compete reform. As recently as July of this year, the Massachusetts Senate Committee on Rules proposed S.2418, a bill that dramatically revised H.4434, the bill passed by the House weeks earlier. The Senate bill contains numerous provisions that would drastically impact employer’s rights to enter into non-compete agreements with their employees, including:
- Non-competes would be limited to 3 months in length, unless the employee in question has breached a fiduciary or misappropriate employer property, in which case they are capped at 2 years.
- Non-competes would be prohibited for (1) non-exempt employees, (2) employees who are terminated without cause or laid off, (3) undergraduate or graduate interns, (4) employees 18 years of age or younger, and (5) employees whose average weekly earnings are less than two times the average weekly wage in the Commonwealth.
- Non-compete agreements must state that the employee has the right to consult with an attorney prior to signing and must be provided to an employee by (1) issuance of a formal offer of employment or (2) 10 business days before start date, whichever is sooner.
- Non-competes entered into during the course of employment must be supported by consideration beyond continued employment.
- Non-competes must provide for garden-leave pay in an amount equivalent to at least 100% of the employee’s highest annualized earnings during the previous two years.
This law, if passed, will dramatically change non-compete law in the Commonwealth.
- Employers would be required to inform the employees in writing within 10 days of termination of the employer’s intent to enforce the non-compete.
- Employers would be required to review the non-compete with the employee at least once every five years.