For some, the noncompete reform bill that was passed by the Massachusetts House of Representatives on Wednesday “is a nice example of compromise legislation,” but to us and others in the tech community, it just doesn’t cut it.
First, while the one-year enforcement limit is nice for those who have noncompetes longer than that —and it will have an impact there — it doesn’t help people like employees at EMC, many of whom still have to wait an entire year (365 days!) until they can work somewhere else in a similar capacity. In other words, it’s a non-starter.
“EMC’s noncompetes are already limited to one year, but most people can’t afford to take a required year off, potentially with each job change,” Kevin Johnson, spokesman for a group called EARN-TEE representing EMC employees that isn’t affiliated with the company, told me.
“The House left a loophole so big you can drive EMC right through it.”
What’s more, a last-minute amendment gutted “Garden Leave,” which would have required employers to pay workers for the duration of their noncompetes. Now they can legally ask an employee to sign a noncompete for a “mutually agreeable consideration.” So it could essentially render the whole “Garden Leave” thing moot.
What that “consideration” exactly means is up in the air for now, especially since the House rejected an amendment from Rep. Lori Ehrlich, D-Marblehead, that would have attempted to restore the original intent of the “Garden Leave” clause.
“Unless it becomes clear that the ‘consideration’ offered as an alternative to the garden leave provision is equivalent, the bill doesn’t do much to reduce the impact of noncompetes on EMC’s employees,” Johnson said.
Despite the House’s failure, Ehrlich told me an in email that this bill is still important progress.
“This overall language of this bill, including the 12-month period, is a huge step forward for our state and the way that we use noncompetition agreements,” she said, “and I have no doubt that it will positively impact thousands of employees, especially our most vulnerable workers, and the economy of our state.”
It would undeniably improve the current situation — if the bill makes it through the state Senate and ultimately gets signed into law by Gov. Charlie Baker — but it will still leave many in the state without much power over their own employment situations. And that situation isn’t better exemplified by the ones faced by those with one-year noncompetes.
“Happy to see MA taking on non-competes, but the House left a loophole so big you can drive EMC right through it – which was the intent,” Founder Collective Managing Partner Eric Paley tweeted this morning.
We can only hope that the state Senate and ultimately Gov. Charlie Baker can see that more change needs to happen so that everyone can have the freedom to drive the future of our economy forward.
Or as angel investor and former HubSpot CMO Mike Volpe tweeted last night, “we are much better served as a community and economy to have more competition here in MA, started by former employees of our companies.”
And hopefully at some point our lawmakers will become courageous enough to vanquish noncompetes altogether, so that we are on equal footing with our friends in California and make it harder for them to poach our talent.
Clarification: The article has been updated to clarify that EARN-TEE is not connected to EMC. It represents some EMC employees as an employee association.