Patrick Administration Questions the Case for Changing Noncompetes; Community Reacts

7/29/09Follow @wroush

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bound to non compete agreements that [they] signed. To make matters worse, they may not have even realized that they signed them to begin with either. And on top of it all, studies have shown that courts in MA enforce these types of agreements aggressively (see UCLA study).

“No one has convinced me that CA companies are hurting because they aren’t able to lock up their employees under a non-compete. You never hear CA CEOs complain about this. And you don’t hear local VCs or PE folks say that they won’t invest in a company on the west coast because employees aren’t bound by non-competes.

“Somehow our local companies (mostly big) have convinced some elected officials that non-competes are critical to their business. Instead the real motivation could be that they get to pay their employees a lower salary as a result of these lock ups and at the same time stifling innovation.

“We need to create more companies not protect the few we have.”

[Third update, 6:20 p.m., July 29, 2009] Rep. Will Brownsberger comments by e-mail:

“We will continue to work to improve the venture climate and protect employees better by changing our non-compete laws.  I’m hopeful that the administration will ultimately support the responsible bill that we have been developing.”

[Fourth update, 8:30 a.m., July 31, 2009] Secretary Bialecki has published an additional blog post clarifying his position on proposals to change the law around noncompete agreements.

Bialecki writes in part: “I have seen a number of responses to my blog entry on non-competes earlier this week, including one Tweet that summarized it as ‘Bialecki…argues for the status quo.’ I don’t think that’s what I said, but on re-reading my own post, I can see why someone would say that…I think Rep. Will Brownsberger and his colleagues got it right by deciding to limit/regulate non-competes, as opposed to attempting to eliminate them in Massachusetts…[That] does send the discussion down a challenging path, because the limitation/regulation approach means that a lot of lines need to be drawn in places where there is no clear answer…Does that mean the limitation/regulation approach is not worth trying? Absolutely not. We welcome the efforts of Rep. Brownsberger, his colleagues and other stakeholders in the MA innovation economy to explore the possibilities for non-compete rules that work better than the ones we have today, and we will certainly keep an open mind.”

Wade Roush is Xconomy's chief correspondent and editor of Xconomy San Francisco. You can subscribe to his Google Group or e-mail him at wroush@xconomy.com. Follow @wroush

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  • Pearl Freier

    If there isn’t a bigger lobby in the MA tech community against non-competes, status quo will remain. It sounds like the Patrick administration is hearing only from a small number of people on why non-competes are hurting innovation in Massachusetts. There’s plenty of evidence to support why change is needed- but not enough people are coming forward.

    Look at what happened when word got out that the Zoo may have to close- when Patrick administration announced budget cuts. The public response forced the change in plans.

    Or perhaps a fair compromise would be to have a bill that limits non-competes to 3 to 6 months.

    Otherwise the curse of Rte 128 is going to continue to haunt us, and we can continue to follow Michigan’s example of how well non-competes work for innovation and growth. And not learn from this.

    Status quo if we’re lucky. That’s the best case scenario probably.

    Just my two cents.