MASSACHUSETTS IS reaping the benefits of a far-sighted decision by iRobot, a Bedford robotics firm, which has adopted a light touch in enforcing its employee non-compete agreements. Instead of calling out the legal cavalry when employees quit the firm, which manufactures the Roomba vacuum-cleaner robot, the company has allowed many to leave for related ventures. The result, according to an analysis in Wired magazine, is that several new robotics firms founded by iRobot alumni have sprung up in the Boston area.
Unfortunately, too many other workers in Massachusetts would be vulnerable to a crippling lawsuit if they tried the same thing. State law allows firms to enforce non-compete clauses, which are restrictive terms in some contracts that prohibit ex-employees from working for competitors. The clauses are meant to protect the investment employers make in training, but in practice they hurt workers, stifle competition, and can lead to bizarre outcomes. In one absurd example last year, a regional sales manager for a beer company was sued after he went to work for another brewer.
By contrast, in California state law does not recognize non-compete clauses, and the state has a far more entrepreneurial start-up culture to show for it. Employees can leave for better offers, or to start their own business, without fear of retribution. Constant employee turnover has been one of the pillars of Silicon Valley’s success: Good ideas are more likely to gain traction, and workers are more likely to take jobs there in the first place knowing they can’t be shackled to employers. Ultimately, the whole state has benefited.
The same dynamics should apply in Massachusetts. In theory, the new robotics companies in the Boston area could become iRobot’s rivals in the future. Yet the presence of numerous firms should also make the whole region more attractive to robotics experts — and make it easier for each company to attract new talent.
Supporters of non-compete clauses sometimes claim they prevent intellectual property theft, and stop workers from taking business secrets to a competitor. Such concerns are overblown: patent and copyright laws aren’t affected by California’s system. A KFC manager in Modesto would be free to defect to Popeye’s, but still wouldn’t be allowed to share the secret fried chicken recipe. If Massachusetts were to join California in ignoring non-compete clauses, it would not be a carte blanche for piracy. It would simply allow specialized employees to move jobs without as much legal friction as they may encounter now.
There’s no magic bullet that will transform Massachusetts into Silicon Valley. But iRobot has shown how relaxing the agreements can help make the state friendlier to one high-tech industry. Other Massachusetts companies — and state legislators — should take note.