Governor Charlie Baker says he supports new restrictions on noncompete agreements, but he doesn’t want to abolish them entirely.
Baker says he will support a House bill that would make it tougher for employers to use noncompetes, as legislative leaders race against a July 31 deadline to reach an agreement. That means he is not going along with the Senate version of the bill, which comes close to getting rid of noncompete agreements in Massachusetts.
The House bill that Baker now supports would limit noncompetes to one year in length and create a so-called “garden leave” in which employers are required to compensate departing workers at half their pay rate until a noncompete agreement expires.
That’s a stark difference from the version the Senate approved, limiting them to three months, and requiring that the departing workers get fully paid during that three-month period. There’s another big difference in the Senate bill: It would essentially eliminate noncompetes for anyone who earns under roughly $130,000.
“The Governor favors the House version of the noncompete legislation because he believes it better balances workers’ abilities to seek new employment while ensuring cutting edge businesses can protect essential intellectual property,” Baker spokesman Tim Buckley said in a statement. “Finding the right compromise on this issue is essential to ensuring innovative businesses want to stay and grow in the Commonwealth.”
Six members of a conference committee will try to resolve the differences between the House and the Senate bill by the end of the week. Lawmakers wrap up formal sessions for the year on July 31.
Venture capitalists say noncompete agreements are stifling innovation in Massachusetts, particularly when compared to California, where noncompetes are illegal in the vast majority of cases.
But big-business groups, such as Associated Industries of Massachusetts, and some large employers including EMC and Boston Scientific argue that noncompetes are important to ensuring the protection of proprietary information. They also argue that noncompetes help prevent companies from wasting money and time on training new workers just to see them jump ship soon after joining.
House Speaker Robert DeLeo was initially reluctant to embrace noncompete reform. But DeLeo eventually brought the big-business groups into the fold to come up with a compromise, one that became the basis of the House bill.
The House and the Senate do agree on a number of key points. Both bills, for example, would eliminate noncompetes for most hourly employees and require that workers be clearly notified about the noncompete provisions that apply to them before they start a new job.