Noncompete Limits Look More Likely Than Ban

View of the State House golden dome lfrom Beacon Street.
View of the State House golden dome lfrom Beacon Street. –John Tlumacki/The Boston Globe

If there’s going to be any movement in the noncompete clause debate before the legislative session ends this summer, it looks like it might come in the form of a compromise.

That was the big takeaway from Tuesday’s State House hearing about the controversial clauses, as well as a Senate vote later in the day.

The Senate agreed to include an amendment about noncompete clauses in its version of an economic development bill it later passed on Tuesday.

The economic development bill originally did not include language pertinent to the clauses. The House’s version of the bill doesn’t include language about noncompetes. Governor Deval Patrick had originally proposed banning noncompetes when he first presented his vision of a Massachusetts economic development bill.


The compromise included in the Senate bill doesn’t entirely do away with noncompetes, but puts certain limits on them. Similar limits were discussed at the Joint Committee on Economic Development and Emerging Technologies hearing, with the state suggesting it would be willing to seek such a middle ground, The Boston Globe reports.

So what would those limits look like? Going by the Senate bill, they would limit noncompetes to six months and limit their use for hourly wage earners. Similar limits were discussed at the State House hearing.

With such language now included in the Senate economic development bill, that sort of compromise language figures to come up again during conference committee and may work its way in to the final version of the bill.

But what’s the old saying about compromise—that all it really amounts to is nobody getting what they want?

Boston’s startup community, which has advocated for striking down the clauses on the grounds that they stifle the innovation ecosystem, crammed itself into yesterday’s hearing. Its members didn’t seem too taken with the idea of a middle ground. From BetaBoston:

And that is something that's undoubtedly on the minds of some tech founders in Boston--even well-established entrepreneurs such as Andy Palmer, the Vertica co-founder now behind the Koa Labs startup office and Cambridge startup Tamr.

Palmer's message to state lawmakers today: "Please pass this bill without compromise."

"Please do not make me and folks like me move to California," he said.

And others who spoke today--including Steve Kraus of Bessemer Venture Partners and Rich Miner, the Android co-founder and Google Ventures investor--made no mention of being interested in a compromise but did put in stark terms the competition for talent with California. Kraus said he's recently spent a large amount of time in California, and reported that "we're losing the war on talent" to the state.

California doesn’t allow for noncompete clauses and has been used as a sticking point for those in favor of a ban.


Nor did those who support noncompetes seem too thrilled with the idea of putting limits on them. From the Globe:

At least one business group that has supported keeping noncompete agreements, Associated Industries of Massachusetts, also showed a lack of enthusiasm about a compromise, saying after the hearing that it sees no need to change the current law.

But Sen. William Brownsberger, who pushed the amendment to the Senate bill, told that regardless of how things shake out, the vote to include the compromise—which senators voted to include in the bill 32-7—shows that “a great many legislators recognize need for reform’’ around noncompetes. “It’s a step forward,’’ he said.

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