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Employment Law Alert
House Passes Bill Restricting Employee Noncompetition AgreementsBy: Scott J. Connolly
June 30, 2016
The Bill Now Heads to the Senate
In a prior alert, we notified clients about H. 4323, a proposed bill imposing strict new requirements on the use of employee noncompetition agreements in Massachusetts. Yesterday, the Massachusetts House of Representatives unanimously approved a slightly modified bill, H. 4434. One amendment was added allowing an employer and employee to agree on alternative consideration to substitute for the 50% “garden leave” salary payments required during the post-employment non-compete period. The full text of H. 4434 is available at: https://malegislature.gov/Bills/189/House/H4434. The issue now heads to the Senate, which previously has supported non-compete reform.
A few points to keep in mind about H. 4434:
- It restricts non-compete provisions. It expressly does not apply to non-solicit provisions, i.e. “covenants not to solicit or transact business with customers, clients, or vendors of the employer,” covenants not to solicit or hire employees, non-competes in the sale of business context, Non-Disclosure/Confidentiality Agreements, and Invention Assignment Agreements.
- As currently drafted, it will apply to noncompetition agreements entered into on or after October 1, 2016.
We will continue to monitor this situation closely and advise clients of new developments. For questions about this topic, please contact Scott Connolly.