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Tech workers turn out on Beacon Hill to decry noncompetes

Jun 23, 2015 | Boston Globe

By Callum Borchers

Dan Shore and the executive team at Cambridge startup Onshape Inc. used to require new hires to sign noncompete agreements. But the makers of three-dimensional design software dropped the restriction last month, according to Shore, after realizing that similar policies at other companies were making it harder to find available talent.

“We felt the effects of wanting to employ people that were subject to noncompetes and couldn’t employ them,” Shore told lawmakers Tuesday during a hearing at the State House. “We thought it was hypocritical because we asked our own employees to sign something that shows a fundamental level of mistrust.”

Testimonies like Shore’s dominated a two-hour session devoted to five bills that together would effectively end Massachusetts employers’ ability to impose noncompete restrictions on their workers in most cases. The covenants, common in technology but also found in other fields, require employees leaving their jobs to wait a finite period — sometimes a year or longer — before joining or launching other firms that compete with their previous companies.

A dozen entrepreneurs, technology workers and venture capitalists paraded before the Legislature’s Joint Committee on Labor and Workforce Development to support the bills, arguing that noncompetes hurt the state economy by hampering people who want to advance their careers or start new ventures.

Even the lone opposing voice — Mark Gallagher, executive vice president of the Massachusetts High Technology Council — called for new rules limiting the length of noncompete agreements and mandating that employers notify job candidates if they will be expected to sign them.

“We oppose any statutory ban on noncompetes. We think that goes too far,” said Gallagher, whose group represents 160 companies, including iRobot Corp. and IdeaPoint Inc. “But we do believe that additional restrictions do make sense, and we’re committed to working on those issues.”

Other opponents have taken a harder line and appear ready to make the case for keeping noncompetes intact in a less public forum.

Associated Industries of Massachusetts, a business association with roughly 4,500 members, did not send a representative to testify Tuesday but submitted five pages of testimony written by vice president Douglas A. MacDougall.

He wrote that any new limit on noncompetes “would send a clear message to the businesses community that intellectual property, the jobs and significant investments made to invent and manufacture here by small and large firms alike, is not sufficiently protected in Massachusetts.”

EMC Corp., known as a quiet but strong advocate of preserving noncompetes, did not provide any testimony Tuesday but once again retained the Boston law firm Nutter McClennen & Fish to lobby on the issue, according to public records.

C.A. Webb, executive director of the New England Venture Capital Association and a supporter of an all-out ban on noncompetes, said the groups and businesses fighting for the status quo lack a compelling public message, so they rely on other channels.

“That’s why these companies don’t come out and make the case — because there isn’t an eloquent case to be made on that side,” she said.

 

 

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