Hearings on Non-Compete Restrictions Set for Next Week

9/30/09Follow @wroush

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with the bill’s language, said his Trade Secret/Noncompete Blog Monday that the latest version has been revised to reflect feedback collected about the July draft and to “achieve an appropriate balance of protections and incentives to both employers and employees, and make it easier for both sides to predict the outcome of any potential dispute, thereby reducing the need to resort to the courts for resolution of such disputes.”

The hearing is sure to attract attention among local entrepreneurs and investors. There is a widespread—though by no means universal—perception in the Boston-area technology community that non-compete agreements make it harder for Massachusetts entrepreneurs to find the best positions or start new businesses, thereby slowing innovation. As Spark Capital partner Bijan Sabet blogged in July, “We are limiting our potential by restricting the labor market.”

Sabet and other members of the Alliance for Open Competition, a group started by Spark Capital, continue to push for a ban on non-compete agreements, which, it’s argued, would put Massachusetts on an equal footing with states like California where courts don’t generally enforce the agreements. They’ve criticized the Ehrlich-Brownsberger drafts as an insufficient step in that direction.

But Brownsberger, in comments to Xconomy in July, said a compromise was necessary to win over business interests who feel that non-compete agreements are a vital protection against the loss of trade secrets and other inside information. “We listened carefully to those concerns and attempted to craft a bill that would improve the venture climate, provide employees with some real relief from overreaching non-compete agreements, yet at the same time allow businesses—particularly small businesses—to protect what they feel is vital to their survival,” Brownsberger said then.

The hearing on the bill is scheduled for 10:30 a.m. to 1:30 p.m. in room A-2 at the Massachusetts State House and is open to the public.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • JR

    Non-competes are a real problem for employees below the executive level. Companies can put some pretty ridiculous verbiage in front of new hires that would prohibit them from working at any competitor, customer or a very broadly defined industry. California, on the other hand, totally bans them. Yet they continually excell in the high tech industry over MA. These documents should be banned outright unless you are a member of the executive staff.

    To think that there is a correlation between income and proprietary knowledge is also absurd. A simple sales guy will blow the income levels away. Yet, he needs to sign a non-compete. Why? Because the company fears he’ll steal their customers. But, they can tap him on the shoulder after a bad quarter or year and send him packing with handcuffs that limit his ability to find a new position. Makes no sense.