State may ban non-compete agreements

In certain industries here in Maryland, non-compete contracts are the norm. Employers see non-compete clauses as a way to protect their customer base and trade secrets. Employees, however, are often of the viewpoint that such contracts limit their rights and career opportunities. These contracts can result in serious consequences for employees, and as such it is important for individuals to seek legal counsel before signing on the dotted line.

The use of non-compete contracts is controversial, and in fact the terms of these agreements are not always enforceable, but employees may not be aware of this. This is why it is also important to seek legal advice if you are being threatened or sued for violating a non-compete contract.

In Massachusetts, Gov. Deval Patrick has recently introduced legislation that would ban the use of non-compete agreements in technology and life sciences, among other fields. The governor’s housing and economic development secretary has called the use of such contracts a “barrier to innovation.”

The state would not be the first to ban non-compete clauses. In fact, the legislation is modeled after California’s ban.

While workers would be free to leave their employers to work for rivals should this proposal pass into law, they would not be allowed to bring along any of a company’s intellectual property.

The measure is sure to be divisive and its future remains to be seen.

Here in Maryland, many people are asked to sign employment contracts that include non-compete clauses when they are hired for new positions. It is important for prospective employees to be aware that they do have rights and it is important to both understand and agree to anything that they will sign.

Source: The Boston Globe, “Patrick looks to eliminate tech noncompete agreements,” Callum Borchers and Michael B. Farrell, April 10, 2014