Business & Tech

House unanimously approves limits on noncompete agreements

The House of Representatives voted 150-0 on Wednesday to approve a bill that would impose strict new limits on noncompete agreements, a move largely aimed at making Massachusetts more appealing to startups and skilled tech workers.

The bill was the result of a compromise brokered by House Speaker Robert DeLeo and his leadership team. DeLeo aimed to balance the interests of big-business groups with members that rely on noncompetes and the startups and their champions who want to see them go away completely.

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Among other things, the bill would restrict noncompetes to no more than one year in length and would require employers to pay workers half their salary until the noncompete expires, a provision known as “garden leave,” or some other mutually-agreed upon compensation. A wide range of hourly workers would be exempt from noncompetes, and recruits would need to be clearly notified if they would be subject to a noncompete before starting their new jobs.

The issue now heads to the Senate, which has in the past shown more interest than the House in reining in noncompetes.

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Advocates for the startup and venture capital community may push for language in the Senate to ensure that the alternative compensation while a noncompete is in effect is comparable to the garden leave provision. Any major differences between the House and Senate bills would need to be negotiated before lawmakers adjourn from formal sessions for the year on July 31.

Representative Lori Ehrlich of Marblehead has championed noncompete reform in the House for years, and spoke in favor of the bill on the House floor on Wednesday.

“The bill makes a powerful statement about fairness, reigning in the most egregious uses, while still allowing their legitimate use with bright line limitations,” Ehrlich wrote in an email. “Potential employees will be better informed and that information gives them leverage to negotiate so they don’t find out the hard way that they’re stuck.”

Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.
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