The Joint Committee on Economic Development and Emerging Technologies is slated to hear testimony on an economic development bill filed by Governor Deval Patrick last month, that if passed could drastically change the landscape for how business is conducted in Massachusetts.
In April, Patrick introduced a proposal called “An Act to Promote Growth and Opportunity,” and attached to that comprehensive bundle of ways he hopes to invest in education, innovation, infrastructure, and business growth, were plans to both dissolve non-competes in the Commonwealth, and lift the cap on the number of liquor licenses an individual city or town can issue to food-based entrepreneurs. “The bill I am filing will provide new tools and training so our workforce is prepared to meet the needs of employers, invests in our Gateway Cities to promote development across the entire state, and provides incentives to create jobs and stimulate the economy,” Patrick said in a letter sent to elected leaders that will mull the legislation on Thursday.
The committee that’s reviewing the bill will sift through these details—not to mention a slew of other proposals—during the meeting at the State House, and listen in as proponents and opponents specifically interested in the plans to lift the liquor license cap and eliminate non-competes statewide offer varying opinions on the subjects.
Lifting the Liquor License Cap
Cities and towns—including Boston—have been scrambling to regain control of the power to hand out liquor licenses to restaurants and bars in their respective communities.
Recognizing the growing requests by elected leaders around Massachusetts, who recently met with the governor to support efforts for the cap to be abolished, Patrick’s economic development bill would essentially remove the limitations on the number of alcoholic licenses municipalities can issue, in order to open the playing field for those who want to bring new restaurants and bars to a community.
In Boston alone, City Councilor Ayanna Pressley has been fighting tooth-and-nail for years for permission to allow the city to expand its licensing provisions, so that neighborhoods like Roxbury and Dorchester aren’t disproportionately impacted by the fact that some spots have more restaurant and bar options than others. Earlier this year, she filed a home rule petition that went before a legislative committee for consideration. If passed, Pressley’s proposal would allow for additional beer and wine licenses to be available, and keep them in certain districts so that they couldn’t be sold across town. Patrick’s bill could help Pressley achieve that goal more quickly.
While there has been an obvious interest in dissolving the cap so that local legislative bodies wield the power of deciding how many establishments will be allowed to obtain licenses, adding to the competition, some have been weary about expanding on what’s currently available.
Bob Luz, president of the Massachusetts Restaurant Association, said he’s excited by the prospect of bolstering the food and beverage industry’s economic development, creating jobs and new places for cities and towns to gather, but that protecting those who already hold licenses should be an important factor when considering Patrick’s proposal. “There has to be thoughtful deliberation and consideration given to protect those existing owners who have paid a significant premium for a license and sometimes have even used that as a pledge-able asset with their lender to help build the business,” Luz said.
Getting Rid of Non-Competes
As it’s written in Patrick’s plan, any contract—whether on paper or verbally agreed upon—arising out of an employment deal that prohibits and restricts a person’s ability to seek any type of similar opportunity, once they leave a job, will be void and unenforceable.
The measure has garnered massive support from Boston’s tech and investment sector as entrepreneurs have stepped forward to demand that creative thinkers with bold ideas have the ability to branch out and create new businesses without being tied down by a former employer.
“We have a group of about nine or 10 people that will be testifying in support of this,” said C.A. Webb, executive director of the New England Venture Capital Association. “We have been playing politics and we are not a very political group. It’s been educational for us in mobilizing and working with legislators to educate them about where economic growth is coming from, and how much more we could be doing if we move a few roadblocks like non-competes.”
Webb said she has spent more time in the State House hallways than she had initially expected, but the topic at hand is an important one for investors like her, and legislators are hearing the message loud and clear from the business community. “Non-competes slow everything down. It’s slowing down entrepreneurship in Massachusetts,” she said. “Folks in my community, the name of the game’s talent recruitment. You want to find experienced people,” and you can’t do that if people are bound by contracts that keep them from moving around for six months to a year—or more.
Webb said in some examples, people will choose to invest in California companies, over ones in Massachusetts, because it’s less of hassle dealing with employees who don’t have wait before moving on to a new opportunity. “It’s a basic rights issue for working people. Non-competes assume that all employees are bad actors, and we are interested in protecting companies and workers,” she said. “It’s one thing for someone with wealth to sit out a year or two and wait before they can work again—it’s a waste of time and loss to the economy—but where this becomes pernicious is when someone young like an MBA grad, someone who is 30, tries to leave their job and realizes they’re being litigated against by their former employer, and ends up spending months of their life fighting this. It’s financially crippling.”
While a good deal of business leaders within the sector have had unbridled support for Patrick’s pitch, some—like legal advisors—are being cautious about what’s written in the governor’s language. “I do not have a position on whether the legislature should dissolve non-competes. I understand both sides of the issue and do not view my role in advising the legislators and the Patrick Administration to include taking a position on policy; that’s for them to decide,” said Russell Beck, a lawyer versed in fair competition and intellectual property, from the firm Beck, Reed, and Riden in Boston. “My only concern is that if they enact this bill, they do it the right way. I have provided them with language to fix some of the problem language and will be speaking to that later today.”
The governor’s bill isn’t the only piece of legislation that’s been circulating around the State House, either. Aside from this package of proposals, the Joint Committee on Labor and Workforce Development favorably voted out a separate bill in April that would also do away with non-competes. Officials from the House of Representatives are also expected to formulate their own version of an economic development bill to be considered by the legislature.
Members of Lighthouse Capital Partners, Spark Capital, PayPal, Acquia, NEVCA and Bessemer Venture Partners are expected to attend Thursday’s hearing alongside Webb as well.
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