Beta Boston, 10/13/15
No disrespect to EMC Corp., in the midst of being gobbled up by Dell for $67 billion. Its founders and employees created a true pillar company here in Massachusetts – one that set the agenda for the data storage business for more than 35 years, and made some very smart acquisitions.
But EMC also grew to become the staunchest defender of employee noncompete agreements. Those are the contracts that many workers and executives sign that prevent them from leaving to join – or start – a competing firm for a set period of time, often a year. They’re used in many states, but not in California. A sustained effort to ban their use, or at least limit it, hit a wall on Beacon Hill last year.
As local and state legislators worry about the layoffs that could follow the Dell-EMC combination, I think they instead ought to use this as a “teachable moment,” and alter the way Massachusetts allows companies to use noncompete agreements to lock in employees. EMC’s stance was in the best interest of EMC; it discouraged EMC’s best people from striking out on their own. But it also inhibited the growth of a strong storage and data management ecosystem here.
“Such a huge company with so many employees has set the tone and the culture in Massachusetts,” says Ellen Rubin, co-founder of the Boston data storage startup ClearSky Data. “It affected all of the boiler-plate letters and contracts that people use, and it affected the way in which people here think about things. People see noncompetes as a serious issue – that they will be enforced.” That, Rubin says, creates a chilling effect when any employee thinks about changing jobs or starting a company of their own.