You are young. It’s your first real job. They put a lot of paper in front of you when you walk in the door. You sign it all and get down to work.
A few years later, things have changed; you don’t see a way forward anymore. It’s time to move. You get a new job. You put in your notice. Your boss accepts your resignation then pulls out a piece of paper that says you won’t work for anyone else in the same business for a year. You see your signature at the bottom and your heart sinks. What now?
Or even worse, things seem to be going well and your boss calls you in and says things have changed for us and we are laying you off, and, by the way, you can’t work for anyone else in the same business.
Over the past few years, we’ve heard variations of this story again and again. More and more in Massachusetts, employers, from hair salons to tech giants, are using a legal device called a non-competition agreement to prevent employees from changing jobs.
Massachusetts is a state that enforces non-competition agreements and they have a place in business — employers may have a legitimate need to protect confidential information, trade secrets or business relationships. A non-competition agreement is a simple way to protect these interests. With a non-competition agreement, the business doesn’t need to go to court and prove that the employee has stolen secrets or abused confidential information to help their new employer, which would mean an expensive lawsuit requiring voluminous depositions and document discovery. Instead, all the employer needs to do is produce the document showing that the employee agreed to stay out of competitive businesses.
But over the past few years, the agreements have gotten overly broad in common practice — they keep people out of work too long, keep them out of kinds of work that aren’t related to the work that they were doing for their old employer and keep them out of territory that never really belonged to their old employer.
If an employee goes to court and tells a judge that she is being tied down by an agreement that is broader than necessary to protect the legitimate interests of her old employer, the court will narrow the agreement. But junior employees don’t know this and the process is, in any event, far too expensive for most employees to undertake. We’ve heard from people whose careers were entirely derailed and/or who suffered real economic hardship as a result of being barred from employment in their field by non-competition agreements.
This is not only wrong and hard on workers, but it stifles economic development in Massachusetts. In California, where non-competition agreements are entirely prohibited, companies like Google and Facebook sustain a whole ecosystem of spin-off businesses. By contrast, many Massachusetts tech employers use aggressive non-competition agreements that may protect their core interests, but also inhibit innovation and growth in the Massachusetts economy.
For the past two legislative sessions, a group of legislators has been working on legislation to curtail the use of overreaching non-competition agreements. Some far-seeing leaders in the business community, like the Small Business Association of New England and the New England Venture Capital Association, have been willing to engage in a constructive conversation about how to end the abuses. Others have defended the status quo — opposing the reform proposals as if they constituted new, burdensome regulations. In truth, there is an existing regulatory regime, defined by the courts, and it needs reform.
Whether defenders of the status quo are able to block legislative action in the current session remains to be seen. But the issue won’t go away. The abuses continue to create new victims.
Will Brownsberger is a Democratic state senator from Belmonst. Lori Ehrlich is a Democratic state representative from Marblehead.