Business owners concerned about the invalidation of prior, existing and future non-compete contracts can relax, for now. But the threat of elimination of non-competes is still very much an ongoing reality.
You may recall that this past spring Massachusetts Governor Deval Patrick had proposed a law that would have mostly invalidated non-compete contracts, especially in the technology and life sciences industries. The elimination of non-compete contracts was to accompany the adoption of the Uniform Trade Secrets Act (“UTSA”), which 48 other states, including California, have already adopted. The Governor’s proposal would have also retroactively invalidated those non-compete contracts.
The Governor’s bill was incorporated into an economic development bill brought before the Massachusetts Legislature. However, this week, on the final day of the General Court session, Legislators passed the bill but not before they excluded the Governor’s proposal to restrict non-compete contracts from it.
Over the years, other attempts to restrict or outright ban non-compete contracts have been tried and failed. BUSINESS OWNERS BEWARE, though, as this appears to be only a temporary victory. Senator William N. Brownsberger said that statutory restrictions on non-compete contracts are far from being dead. Brownsberger has proposed statutory restrictions that would impose restrictions on the duration of non-compete contracts and an all-out ban on non-competes for hourly wage employees.
Business owners should be sure to stay on top of this issue because you may someday find that the non-compete contracts you have used in the past are useless, leaving your business exposed. The adoption and implementation of the UTSA will give business owners other avenues to protect confidential, proprietary and trade-secret-type information, but employment and related contracts (whether executed at the start of, during or end of the employment relationship) will require significant revision to accord with any new statute on this issue.
In practice, every business owner should have employees and independent contractors execute contacts that clearly state the terms of the relationship, the obligations of each party, as well as the restrictions on employment and disclosure of information during and after the employment / contractor relationship.
THE JACOBS LAW | Your Attorneys for Employment, Non-Disclosure / Confidentiality & Non-Compete Provisions
A Business Attorney at The Jacobs Law LLC can assist your business with information on this issue or to obtain customized employment agreements, non-compete contracts, and non-disclosure / confidentiality contracts. Our Business Attorneys have experience advising, drafting and litigating these types of contracts. Contact a Boston Business Attorney at The Jacobs Law LLC today!