Posted by Sequel on June 18, 2014
Topic: blogs, Trade Secrets
Tags: Non-Compete Agreements
MA Gov. Wants State to Become Only the Fifth to Ban Non-Compete Agreements

Massachusetts Democratic Gov. Duval Patrick has submitted legislation that would make his only the fifth state in the nation to place an outright ban on employee non-compete agreements. The legislation is part of a larger package aimed to address the state’s competitiveness with other states with large-scale technology-based enterprises where non-competes are sometimes seen as obstacles to innovation.

Massachusetts would join California, Montana, North Dakota and Oklahoma as the only states in the union that prohibit such agreements. The state is also considering adopting the national Uniform Trade Secrets Act (UTSA), on which it is one of only two state holdouts (the other being New York).

Because the Massachusetts legislative year ends on July 31, it is seen by proponents of the new law as essential that action be taken before that date. Once that date passes, any lone legislator can object to the bill continuing to be considered. Since Massachusetts will also elect a new governor before the next legislative session, it seems unlikely the bill will become law if it isn’t enacted before the end of July.

Non-compete agreements are just one way to protect a company’s trade secrets. Non-disclosure agreements, which are legal in some form in all 50 states, are a generally acceptable way to prevent the theft of company proprietary information and its use for the benefit of competitors.

The USTA explicitly states that it does not address the issue of non-competes, leaving this question up to the individual states.

 

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