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Employee Non-Compete Agreements and Job Creation: The Status of Law Reform a Year Later

Tuesday, July 20, 2010 4:00 PM to 6:00 PM
Boston Bar Association - 16 Beacon Street, Boston, MA


Description:

It is argued that employee non-compete agreements have chilled the spawning of new enterprises in Massachusetts compared to California where such agreements are generally unenforceable under an 1872 codification of the common law.  Under Anglo-American common law, servitudes were disfavored and non-competition agreements were enforceable only to protect goodwill or trade secrets.
 
It is countered that the California approach would deprive businesses of their investments or require expensive trade secret litigation. Massachusetts decisions extend enforceability to protect "confidential information" that does not clear the high hurdle for trade secrets under the 1939 Restatement of Torts.
 
Last year, State Representative William N. Brownsberger, with 25 co-sponsors, filed H. 1794, which would have instituted a rule similar to the California statute.  http://www.mass.gov/legis/bills/house/186/ht01pdf/ht01794.pdf
 
State Representative Lori Ehrlich, with seven co-sponsors, filed H. 1799, which would provide restrictions on the procedure and enforceability of employee non-compete agreements.  http://www.mass.gov/legis/bills/house/186/ht01pdf/ht01799.pdf
 
The Massachusetts Uniform Law Commission filed H. 87, which would expand Massachusetts protection for trade secrets as more broadly defined under the Uniform Trade Secrets Act adopted by 45 other states, including California, and the District of Columbia.  http://www.mass.gov/legis/bills/house/186/ht00pdf/ht00329.pdf
 
Representatives Ehrlich and Brownsberger agreed on a compromise bill reported out of committee as  H. 4607, which had a second reading in the House and is now before the Judiciary Committee.
http://www.mass.gov/legis/bills/house/186/ht04pdf/ht04607.pdf
 
H. 87 is on extension, also before Judiciary.  The American Law Institute at its May 2010 annual meeting approved Chapter 8 of the proposed Restatement of Law (Third) on Employment Law, "Employee Duty of Loyalty and Restrictive Covenants," which applies Uniform Trade Secrets Act standards to support enforceability of employee non-compete agreements.
 
With the slow recovery in employment levels, is there a balance to be struck?
 
Please join us in a discussion of law and policy:
 
State Representative William N. Brownsberger, Esq., sponsor of H. 1794.
State Representative Lori Erlich, sponsor of H. 1799.
Russell Beck, Esq., Beck Reed Riden, LLP, drafter of H. 1799 and H. 4607. 
Andrew P. Botti, Esq., McLane, Graf, Raulerson & Middleton, P.A., Chairman, Smaller Business Association of New England (SBANE), on behalf of status quo.
Stephen Y. Chow, Esq., Burns & Levinson LLP, Massachusetts Uniform Law Commission, drafter of H. 87, symposium organizer.
Hon. Gordon L. Doerfer (Ret.), JAMS, moderator.
Prof. Matthew Marx, MIT Sloan School, researcher on use of non-competes in high-tech industries.

Sponsoring Section/Committee(s):

Speakers:

 

Contact:

Christine Cheung
ccheung@bostonbar.org

 

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