Almost every state in the nation has adopted some version of the Uniform Trade Secrets Act (UTSA). For many years, the two biggest holdouts had been Massachusetts and New York, which both stubbornly clung to a mélange of common law principles to protect trade secrets.
As of Friday, August 10, Massachusetts joined the UTSA club by adopting its own version of the UTSA. However, that adoption was part of a larger effort to regulate employment non-competes in Massachusetts. So in addition to providing new statutory protection for trade secrets that will be largely congruent with the law in other states (and under the federal Defend Trade Secrets Act), the bill signed by the governor also governs employment non-competition agreements. The new law requires that employers who want to have enforceable non-competition agreements with their employees (and some independent contractors) will have to provide what is known in Europe as “garden leave pay,” or some other “mutually-agreed upon consideration.” Under the “garden leave pay” concept, the employer needs to pay the employee compensation during the period of the non-compete, which minimum compensation the Massachusetts legislation defines as at least 50 percent of the employee’s highest annualized base salary earned during the two years before termination.
It will be interesting to watch how Massachusetts courts apply the UTSA in light of the centuries of trade secret common law that have developed in Massachusetts in the absence of a statute. And the question now becomes whether New York will continue to go its own way in the area of trade secrets law, or decide to join the club.