Posted by Rebecca Ferrante at 6:21 PM
Last week the Massachusetts Legislature’s Joint Committee on Labor and Workforce Development held a hearing regarding the enforceability of non-compete agreements. Non-compete agreements protect companies by limiting a separating employee’s right to work for competing companies within a specified time span or geographic area. The goal is to prevent the loss or transfer of a company’s proprietary information or trade secrets. Among the controversies surrounding non-competes is the theory that they stifle innovation and threaten the viability of an effective workforce by restricting employment mobility. Particularly critical to the fast paced and competitive technology industry, non-compete provisions are standard to many employment agreements.
The arguments against non-competes emphasize the individual’s right of access to ongoing and continuous employment, particularly within their field of expertise. Picture a pharmaceutical data analyst who develops statistical models that evaluate the likelihood of manipulation in clinical trial results. After leaving the pharmaceutical company, he is prevented from working in his field for 12 months, in the place where he has lived and raised a family for ten years. His options are to remain unemployed for the cool-off period or to uproot and seek work in another location out of state or within a different industry. Currently, the proposed legislation seeks to limit the duration of a non-compete agreement to no longer than six months and if one of a few limited exceptions does not apply, a longer duration will render the agreement entirely unenforceable. This is a step in the right direction for our recently unemployed data analyst skilled in a highly specialized field.
In concert with limiting the duration of enforceable non-competes, and in an effort to strike balance between the competing interests of technology employers and employees, Massachusetts is revisiting the Uniform Trade Secret Act (UTSA). In January, the Legislature proposed House Bill No. 27: An Act Making Uniform the Law Regarding Trade Secrets, which aims to insert the UTSA into Massachusetts General Laws Chapter 93. Massachusetts is one of only three states to not adopt the UTSA, the codification of common law detailing rights and remedies intended to protect information “not generally known and not ascertainable by proper means, generated by specific person/s with an interest in protecting its value.” The UTSA protects employers from misappropriation and disclosure of trade secrets by improper means and provides a vehicle for seeking injunctive relief and damages. The Bill has been referred to the Joint Committee on the Judiciary.
Given the local tech-economy and preponderance of technical talent, the Commonwealth has a vested interest in securing legislation that continues to motivate competition between innovators while enabling individuals to pursue professional endeavors and advancement at will. Relief provided to companies by the UTSA should render non-compete agreements unnecessary when paired with traditional nondisclosure, non-solicitation and existing intellectual property laws.
