With federal ban blocked, here’s where noncompete agreements stand in Massachusetts

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This was supposed to be a pivotal week for Massachusetts businesses.

The Federal Trade Commission’s ban on noncompete agreements was slated to take effect yesterday. It was a sweeping change that the local tech and biotech fields (where noncompetes are common) had been bracing for — until a judge in Texas blocked the rule last month.

So, where does that leave us? WBUR’s Zeninjor Enwemeka joined Morning Edition to break down what the recent developments mean for Massachusetts businesses and workers — and what’s next.

What was the reason for the ban in the first place?

Companies use noncompetes to prohibit an employee from going to work for a competitor for a period of time. However, the FTC — which estimates about one in five workers are bound by noncompetes —argued they’re exploitative and stifle entrepreneurship.

According to the FTC, the ban would spur thousands of new businesses a year, boost innovation and increase wages.

What has happened since the ban was announced?

FTC voted in April to ban noncompetes nationwide. Beginning on Sept. 4, almost all noncompetes would become unenforceable, with the exception of existing agreements with senior executives.

Lawsuits from business groups immediately followed, including in Texas federal court. The judge there tossed out the ban on Aug. 21, ruling that the FTC doesn’t have authority to make such a rule.

What does that mean for Massachusetts?

Massachusetts actually already had its own partial ban on noncompetes, dating back to 2018. The law limits noncompetes to one year for most workers, and can’t be used for workers entitled to overtime pay (i.e. hourly, mostly lower-income workers).

The federal ban would have superseded that law if it held up.

How are local business leaders responding to court ruling?

Many local businesses were reviewing contracts and contacting lawyers in anticipation of this week. But for now, it’s the status quo.

The state’s largest business group, Associated Industries of Massachusetts, is happy about that. They told Zeninjor that the federal ban went too far and that the state law was a fair compromise.

However, Ari Glantz, the head of the New England Venture Capital Association, told Zeninjor that the court ruling was a let down.

“The bottom line for us in the innovation economy, when we look at this, is how do you create an environment where companies are incentivized to be as innovative as possible and innovative people are as free as possible to create new companies,” Glantz said.

So… now what?

The FTC says it’s seriously considering an appeal, but many observers say it’s not likely to be successful, given the legal landscape.

Not only is there a more business-friendly appellate court, but the Supreme Court has shown it’s not a fan of federal agencies doing any rule-making. That means the best chance for federal rule is a law passed by Congress, but that’s also unlikely in an election year.

In other news:

First day of school: More than 40,000 students head back to class today at Boston Public Schools. And as WBUR’s Carrie Jung reports, the district is focusing on ensuring they get there on time. The school system will start the year with a fully staffed school bus system, with more than 740 bus drivers and 750 monitors on hand.

• BPS is also rolling out a new bus tracking app to give parents a better idea of where their child’s school bus is. It will also provide drivers’ route directions, replacing an old paper-based system.
• Zoom out: BPS is under a state mandate to raise the on-time bus arrival rates to 95%. The district ended last year at 90%.

New to the beat: The Massachusetts State Police Department (finally) has a new leader. Gov. Maura Healey named Geoffrey Noble as the new State Police colonel yesterday, more than 18 months after the force’s previous leader, Christopher Mason, retired. Noble was with the New Jersey State Police for nearly 30 years, including as its second-in-command from 2018 to 2022.

• Noble is also the first outside hire under a 2020 state law that lifted the longtime requirement that governors had to pick State Police colonels from the department’s internal ranks.

How the turn tables: Cambridge state Rep. Marjorie Decker might hang on to her seat after all. After hand-counted ballots were added, Decker now leads challenger Evan MacKay by 41 votes. But as the Harvard Crimson reports, she’s not declaring victory just yet.

P.S.— The Boston Pops will play John Williams’ “Star Wars: The Force Awakens” score in its entirety for the first time tonight — in the first of two live-scored screenings of the 2015 movie at Symphony Hall. Tickets for both shows are still available on the BSO website.

This article was originally published on WBUR.org.