Changing MA’s Non-Compete Laws

Amrith Kumar put up a blog post last week that presented some thoughtful arguments in favor of non-competes and also spurred a great thread of comments that are well worth reading. I for one am very much looking forward to the Non-Compete Forum being held on July 22nd. Over the past few weeks there has been a gaggle of great conversation online and offline about the state of the state as it concerns these non-competes. The Boston Globe today published an op-ed on the issue. Dialogue is good!

For the world in which I live (early-stage internet / software / mobile startups) I believe that non-competes are relatively pointless, and a net-drain on the overall MA ecosystem. However the arguments for and against broadly changing or striking the laws are not cut-and-dry.

The idealists-against-non-competes believe we have enough data to declare MA non-competes valueless and growth-limiting. That’s a non-trivial leap to take based on examining insanely complicated ecosystems in jurisdictions other than MA. It might be true, but if the analyses are wrong, it could be a gargantuan mea culpa.

The idealists-in-favor-of-non-competes believe that things are fine, and the employers and court systems will behave rationally. This is a stretch, since extracting the ultimate ‘rational’ answer to a non-compete contract / argument will involve litigation, thereby maiming the entire process at the outset.

The pragmatists seem to be arguing that non-competes, as currently crafted and legislated in MA, are just too broad, and we just need to put in place better clarification re: who they apply to, for what reasons, for what timeframes, and in which industries. Amrith’s post and the ensuing comment discussion riff on this nicely. However, even a cursory pass through the proposed House No. 1799 should make your eyes roll. Nobody said pragmatism was easy ;-) .

If you care about this issue (and you know you should), please consider attending the forum being held on July 22nd so we can all get better educated and get this problem fixed!

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6 comments

  1. Employee

    Hi,
    We work for a employer and we signed the non comptee agreement and employer force us to work on weekends since dead line needs to met and daily we need to put extra hours if not he will make us to leave the company .
    We cant even join other Competive company due to NDA and due to H1 VISA ,employer always take adavantage on employee. Employee gained over years of experince in particular domain and employeee cant change /learn other or new domain even if he learn its very difficult to get the job.
    Litteraly employer sucks the blood of employee using the Non Compete agreement.
    We need to bring the new law asap boz of large number of employee suffering.
    We need to void NDA or NCA only to protect employer new law should me they cant steal the Business or client .
    ordinary software engineer cant get the business so the law should be only for sales or managment or decision making or project managment or service management.

  2. Scott Kirsner

    Step #1 here is educating employees about non-competes, so they can ask intelligent questions. I also think companies that *don’t* require employees to sign non-competes (Google Cambridge and Conduit Labs are just two) ought to do a better job of communicating that fact.

    But Step #2, if we really want to get rid of non-competes, is to harness the hundreds of thousands of employees in MA who are asked to sign them. No employee likes signing a non-compete. Bijan Sabet of Spark Capital recently set up a petition to try to get lots of “regular folks,” not just founders and VCs, behind his efforts to eradicate non-competes in Mass:

    http://www.thepetitionsite.com/75/support-the-alliance-for-open-competition

  3. John Stack

    How do you see a free market having an impact on non-competes? Similar to how VCs might refuse to sign them – or potential employers might refuse to engage potential candidates, employees not working at a given employer due to clauses? I think it leads to a data problem – having explicit instances to help lawmakers make the appropriate legislation.

  4. Shawn

    Very pragmatic of you, John :-) . My gut concurs, but I do not believe that such a compromise can actually be crafted into language of the law. I’d be happy to be proven wrong, but it sure seems intractable at this point.

    The hardest answer, the riskiest answer, and the right answer is to let a free market decide what non-competes are worth to the ecosystem. The general laws and case law in MA though (currently) preclude such an experiment.

  5. John Stack

    Thanks for the post Shawn. My own 2 cents: Limited non-competes seem to be the best way forward. The challenge to me seems to be protecting a company’s plans for the future as well as the assets and methodologies and strategies they’ve developed in their given market along the way.

    Some protections have to be afforded or removing
    protections may serve to dampen or altogether stop a company from being a market and technology leader. I hope the dialog continues and that large companies step up and get involved in the dialog. I anticipate that companies will adapt to whatever, if any, changes are made; however, it might take a while to figure out a way forward. No matter the case, if it affects MA’s ability to compete, then we should, in some way, level the playing field.

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