One of the biggest issues that Boston’s startup community faces is the ever-looming non-compete contract – something nearly every employer in the Massachusetts area insists employees sign.
The problem with non-competes is that after signing this agreement former company employees cannot work for a competitor company for a lengthy amount of time following employee termination or start a business that might be seen as competition. That amount of time is usually one year.
Since startups thrive on competition, being barred from hiring top tech talent due to non-competes stifles the thriving Boston tech scene (and prevents new startups from forming). Two proposals created by the House and Senate have been drafted, but neither the House nor Senate was able to come to any kind of compromise this past Sunday.
The House Proposal
The House ProposalThe House proposal would have limited non-competes to one-year forcing companies to pay half of worker’s salaries during that one year. In addition, the House version would have allowed workers and companies to negotiate other terms in lieu of the one-year limitation (though those exact terms were, reportedly, somewhat unclear).
The Senate Proposal
The Senate proposal would have limited non-competes to three-year forcing businesses to pay full salary during that time.
Both sides are sticking to prospective proposals resulting in a standstill for non-compete laws in the Massachusetts area. This is bad news for startups that often look to hire tech employees from bigger companies. Without any kind of compromise that will effectively change non-compete laws, tech startup hands are tied when it comes to hiring tech talent that are restricted from working for a period of time due to a non-compete.
As it stands, there is no agreement in regards to non-compete law changes within the state of Massachusetts. We will keep you posted on any changes.