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Non-Compete Clauses Getting Weaker

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By George Khoury, Esq. on August 22, 2018 6:58 AM

For employers, non-compete clauses are great. They help incentivize employees not to leave, and in most cases, are presented in a take-it-or-leave-it fashion which most employees don't feel comfortable pushing back on.

However, not all non-compete clauses are going to be legal, and depending on the applicable jurisdiction, some will just be completely unenforceable. For example, as explained by Ars Technica, a new law passed in Massachusetts places restrictions on which workers can be subject to a non-compete, exempting certain low paid hourly employees, as well as students and interns. Illinois recently passed a law as well prohibiting non-competes for workers that make less than $13.50 per hour.

Details of the Pro Competition Law

The new law passed by the Massachusetts lawmakers takes aim at the employers exploiting the most vulnerable workers. People working food service and other low paid service industry jobs were being forced into signing non-compete clauses.

Unfortunately, as one Boston University professor points out, the law only bans the enforcement of non-competes rather. In Illinois, their law prohibits employers from even asking protected employees to sign one. This is due to the fact that simply signing a non-compete has a chilling effect on individuals, especially those who wouldn't be expected to understand the what is or isn't enforceable (basically all non-lawyers).

Luckily for workers in Massachusetts who will still be subject to non-compete clauses in employment agreements, the new law limits those clauses to maximum of one year, and also requires employers to provide consideration or a "garden leave."

Non-Compete v. Trade Secret

Notably, in the Ars Technica article, it is explained that companies in California, where the law broadly prohibits non-competes, use trade secret and non-disclosure agreements to protect the same or similar interest. This allows talent to move freely from company to company, while providing each company with protections for their intellectual property and other trade secret information.

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