The New Massachusetts Non-Compete Bill

Last year I talked about a bill sponsored by State Representative Lori Ehrlich that would make significant statutory changes to Massachusetts’ common-law non-compete laws. Although the bill did not get voted on before the end of last year’s legislative session, Representative Ehrlich and State Senator Will Brownsberger are planning to introduce a new, more streamlined version of a non-compete bill.

This new proposal focuses solely on the issue of the duration of non-competes. Essentially, the bill would create a presumption that a non-compete that lasts six months or less is reasonable in duration; conversely, a non-compete that lasts longer than six months will be presumed to be unreasonable in duration. Of course, presumptions are always rebuttable.

In addition, the bill also creates three exceptions that permit enforcement of a non-compete that is found to be unreasonable in duration:

– if the employee violates his or her fiduciary duty to the employer
– if the employee unlawfully takes physical or electronic property belonging to the employer
– the employee has at any time been paid an annualized taxable compensation of $250,000 or more

State Senator Brownsberger’s and Representative Ehrlich’s proposal has not yet been formally introduced, so the final bill may end up looking different; however, given that all of Representative Ehrlich’s previous attempts to change the non-compete law in Massachusetts have died out due to opposition in the legislature, it is likely that this bill will keep its streamlined approach.

As a final note, there is also apparently another proposal working its way to becoming a bill in the state legislature that would have Massachusetts adopt the California approach (outlawing of non-competes except in limited circumstances such as the sale of a business), so it will be interesting to see what level of change gains traction in the Massachusetts legislature.