City Councillors Back Plan to Ban Non-Competes

They say the contracts stifle innovation and limit the potential to build on talent and ideas.

City Hall Photo uploaded by cliff1066™ on flickr

City Hall Photo uploaded by cliff1066™ on flickr

UPDATE:

Boston officials unanimously backed a proposal to send a resolution to Beacon Hill legislators, calling for a ban on all non-competes.

EARLIER:

Just one day after House Speaker Robert DeLeo announced he was filing an economic development bill that did not include provisions to eliminate non-compete clauses in Massachusetts, City Councillors Michelle Wu and Tito Jackson announced their plan to introduce a resolution in support of doing away with the contractual obligations that many employees are forced to sign when they start new jobs.

In a statement sent out minutes before a scheduled City Council hearing Wednesday, Wu and Jackson said they are calling on state elected officials to take action and put an end to the enforcement of non-compete agreements at companies—particularly in the technology and life sciences industries—because they restrict employers from branching out to other jobs or starting their own businesses, squandering the potential to bring new and innovative opportunities to the state.

“The enforcement of non-compete clauses in Massachusetts is a barrier to realizing our full potential for innovation in Boston because employees are prohibited from leaving their jobs to develop startup companies within the same field, thus limiting our potential to build on talent and ideas” said Wu. “We can protect intellectual property and success of all companies while supporting full-scale development of the innovation economy.”

Wu, chairwoman of the Committee on Small Business, Entrepreneurship and Innovation, as well as the Committee on Arts and Culture, said non-competes can stifle new ideas, and in doing so can often drive people to seek employment in other states. She said Massachusetts should follow in the footsteps of places like California, where large companies do not enforce non-competes clauses.

In their call for the state legislature to act swiftly on the matter, Wu added that alternatives like the continued enforcement on non-disclosure agreements, non-solicitation agreements, and confidentiality agreements would protect employers without hindering employees’ opportunities to seek new jobs.

Wu’s proposal, which is being filed jointly with Jackson, comes at a time when Governor Deval Patrick has called for similar actions. In April, Patrick unveiled an economic development plan called “An Act to Promote Growth and Opportunity.” As part of that proposal, Patrick included an amendment that would dissolve non-competes statewide.

On Tuesday, DeLeo filed his own economic development bill, which, unlike Patrick’s, did not include provisions that would bar employers from forcing their new hires to sign these types of agreements.

State Representative Joseph Wagner, chairman of the Joint Committee on Economic Development and Emerging Technologies, who helped DeLeo craft his legislation, said that while there are many similarities between Patrick’s and DeLeo’s plans to help bolster the state’s technology and innovation sectors, doing away with non-competes was not one of them because there were more pressing matters to address before the legislative session ends in July. “If we look at this issue going forward, it’s not going to be we have noncompetes as they exist, or we ban noncompetes. There is clearly some other place, potentially, but we are not even close to that. But I think that’s a dialogue for another day, and to try and have it in the context of this bill with the time remaining would set us back on a number of fronts,” Wagner said.

Wu’s proposal pushes back against DeLeo’s legislation.

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