Part of this article originally appeared in the BostInno Beat newsletter. Sign up to get the Beat here.
Members of Boston’s startup and venture capital scene are largely unimpressed with the noncompetes reform package floated by House Speaker Robert DeLeo on Wednesday, according to comments from leaders of the community.
DeLeo has made the following proposals about noncompete clauses:
limiting noncompete use to a 12-month restricted period,
requiring notice to new hires, and
opposing noncompetes for low-wage workers.
(Worth noting: DeLeo has been a past opponent of the tech community's efforts to ban noncompetes in Massachusetts.)
We reached out to a number of members of the local tech community for comment. Notably, several questioned whether the move is an effort to prevent future attempts at a full ban of noncompete clauses.
Allan Tear, co-founder of Betaspring, put his opposition to the proposal this way: "These half measures will give lawmakers and bureaucrats a reason to not revisit a full solution for 3-5 years, claiming they addressed the problem." And NextView’s Rob Go said, "I fear that a compromise like this will suggest that the issue is resolved, which certainly would not be the case."
Quick recap: noncompetes are seen by many as detrimental to Boston’s innovation economy, constraining growth, stifling new startup ideas, and causing many hardworking people to stop work all together until their noncompetes expire.
Last year, the state Senate passed a reform to noncompetes, but the House ended all of the momentum when they decided not to include the reforms in the economic development bill. Here is a link to Senator Brownsberger's bill which received all of that said support (note: the bill from 2014 is for 6 month noncompete terms).
As for the latest move by DeLeo, Startup Institute VP and Director Allan Telio said he's happy to see some action, but that the new proposal doesn't go far enough."A 12 month noncompete? Are we really suggesting that keeping a talented person out of their industry of choice for a year is a good idea?" he wrote in an email. "It's bad for the economic growth of the state and it's unfair to employees. This isn't just about people who want to leave their company to launch a new company. It's also about employees who want to find a better job. Employees should have the right to work where they want."
Founder Collective managing partner David Frankel said: "I look at this from the perspective of startups. The minute you have a debate about it, it is so obvious noncompetes need to go. I don't know how to say this more patently. It's sort of black and white for me. One year is certainly a start, but i think it's a mistake to accept it because one year is a lifetime in a startup. My worry is corporates can afford to lobby.”
"If a prospective founder is going to quit their job to (do) something innovative, they aren't going to wait 12 months to do it."[/pullquote]
Tear also added, “if a prospective founder is going to quit their job to something innovative, they aren't going to (and shouldn't) wait 12 months to do it,” while Go said, “a year is still a long time if you are a founder or are looking to continue to further your career in the same industry you've been operating in.”
Jeff Bussgang of Flybridge Capital has been fighting to ban noncompetes for years and he takes a more nuanced approach. He tells BostInno: "12 months is a long time, but the real power of the bill will be (1) more transparency (i.e., five business days of prior notification, right to counsel); (2) less restriction (i.e., for laid off workers, garden leave).”
The bottom line is, the tech industry still has a chance to make this reform meaningful. State Rep. Lori Ehlrich, a longtime sponsor of noncompete legislation, told BostInno: "The session doesn't end until July so there's still time to reform."
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