MA Senate’s Proposed Noncompete Bill is MUCH More Stringent Than House Bill

The Massachusetts Senate’s Committee on Rules is advancing legislation on noncompetes that differs markedly from the bill passed by the House and described here last week. (Thank you to Brad MacDougall of AIM for bringing this to my attention.) The bill, S.2418, is structured similarly to the House bill, but has the following significant differences:

  • Noncompetes generally would be limited to 3 months in duration, compared with 12 months in the House bill;
  • Garden leave pay would be required following the employee’s departure, and must be a least 100% of the employee’s highest annualized earnings during the previous two years;
  • Courts would not be permitted to reform overbroad provisions (unlike the House bill and current law, which permits such reformation);
  • Employers would be required to inform employees in writing within 10 days of termination of the employer’s intent to enforce the noncompete;
  • Employers would be required to “review” the noncompete with the employee at least once every five years;
  • Added to the fairly long list of exempted employees in the House bill are employees whose average weekly earning are less than two times the average weekly wage in the Commonwealth. If my information is correct, this would exempt employees making less than about $130,000 annually. It would carve out a very significant portion of the population currently subject to noncompetes.

For the moment, the Senate’s Rules Committee obviously is staking out a position that is much more hostile to noncompetition agreements than the approach taken by the House. Stay tuned.