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5 Arguments For And Against Noncompete Agreements

LabCentral is a shared lab space designed as a launchpad for life-sciences startups, located in Kendall Square, Cambridge. Opponents of noncompete agreements say they hurt Massachusetts startups.(PRNewsFoto/LabCentral/AP)

LabCentral is a shared lab space designed as a launchpad for life-sciences startups, located in Kendall Square, Cambridge. Opponents of noncompete agreements say they hurt Massachusetts startups.(PRNewsFoto/LabCentral/AP)

More than 24 CEOs of Massachusetts high tech firms are urging state lawmakers to ban so called “noncompete agreements.” These are employment contracts that prevent employees who leave companies from working for competitors for a period of time.

The New England Venture Capital Association delivered a petition to Beacon Hill Tuesday that argues, to encourage innovation and job growth, noncompetes “need to go.” Gov. Deval Patrick agrees. A key part of his economic plan unveiled last month ago calls for doing away with them.

Critics say noncompetes slow down innovation and shackle the economy. But supporters say they protect intellectual property.

Andrew Botti’s 5 Arguments For Noncompete Agreements

1. “The reason why it would be a terrible idea is the smaller businesses may be running on one, two or three different products and if they lose just one that could be enough to put them under.”

2. “If you look at the unemployment figures, other than maybe the weather, we do not want to be like California. The Silicon Valley unemployment figures, which you can get, have been much higher in the last few years than not only the rest of the country but certainly Massachusetts.”

3. “Companies are running out of California in droves. Toyota North America just said ‘We’re getting out of California, we’re going to Texas.’ ”

4. “This particular bill the governor has filed makes an assumption that one size fits all and that’s not the case. It’s like passing a law that says, ‘Everyone has to have blue hair.’ ”

5. “Confidentiality agreements are good, non-solicitation agreements are good, but when it comes to protection they don’t offer a full measure of protection.”

Secretary Greg Bialecki’s 5 Arguments Against Noncompete Agreements

1. “For young talent that has a lot of options, they want the ability not only to go to a great job, but to have a chance to pursue their ambitions and their dreams. And that means, for young talent today, moving from company to company. It also means, if they have a brilliant idea, they want to start their own company.”

2. “It’s sort of like killing a mosquito with a sledgehammer because there’s lots of other ways to protect intellectual property including, as the governor proposes, to adopt the Uniform Trade Secrets Act, that 47 other states have already adopted.”

3. “When you’re ready to grow big, when you’re hooked into a good idea and you need to hire a lot of people really fast, it’s so much easier to do that in Silicon Valley than it is here in Massachusetts and that’s because of noncompetes.”

4. “This is a law that isn’t reflective of a 21st century, dynamic innovation economy. Our New England Venture Capital Association is absolutely opposed to noncompetes and is advocating for their abolition, so this is not the way an innovation economy should work and Massachusetts needs to catch up with the times.”

5. “We’ve heard many, many cases from employment lawyers of people who don’t even realize they’re signing a noncompete. In fact, it’s buried in their employment agreement, or they clicked and accepted yes.”

Guests

Greg Bialecki, Massachusetts Secretary of Housing and Economic Development, which tweets at @MassEOHED.

Andrew Botti, director of McLane, Graf, Raulerson & Middleton and an attorney specializing in noncompete law.

More

BostonInno: Gov. Patrick’s Effort To Ban Noncompetes Gains Force On Beacon Hill

  • “Patrick’s bill to foster Massachusetts’ global economy seems to have separated the older, more established firms from the younger companies cropping up in the state. For example, a handful of startup leaders in the Boston-Cambridge area have spoken out in favor of eliminating the binding noncompete agreements, stating that they damper innovation.”

Boston Globe: Time To Get Rid Of ‘Noncompete’ Agreements

  • “Patrick’s bill to foster Massachusetts’ global economy seems to have separated the older, more established firms from the younger companies cropping up in the state. For example, a handful of startup leaders in the Boston-Cambridge area have spoken out in favor of eliminating the binding noncompete agreements, stating that they damper innovation.”

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