By Brooke Thomson
President and CEO

AIM supports many of the objectives of Governor Maura Healey’s “Mass Wins” Economic Development bill (House Bill 5386 An Act Relative to Massachusetts Winning Global Investment, Talent, and Innovation).

The bill makes investments in key sectors of the economy and fortifies our business climate during an uncertain time. As the federal government attempts to retreat from the global economy, Massachusetts must remain a world leader, and this proposal will bolster our global presence.

We applaud Governor Healey, Lieutenant Governor Kim Driscoll, Secretary Eric Paley and their teams for the hard work involved in preparing this legislation. As the legislative process unfolds, we encourage policy leaders to maintain two key objectives – promote new industries and provide necessary support to the state’s legacy employers in sectors that have supported the Commonwealth for decades.

Moreover, AIM supports regional equity in the legislation to ensure that the resources and benefits reflect the nuanced needs of each area of the commonwealth.

Provisions That AIM Opposes

There is one key provision contained in Governor Healey’s proposal that AIM strongly opposes and that we believe will negate many of the stated purposes of the legislation and undermine our ability to remain a leader in some of our most important economic sectors.

Mass Wins contains controversial changes to Massachusetts’ non-competition agreement act, changes that AIM opposes.

The proposed reforms, if adopted, would make substantive changes to the “garden leave” section of the non-compete statute. Currently, non-compete agreements are enforceable up to one year after separation from employment if an employer agrees to pay the worker a “garden leave,” which is 50% of salary, or “mutually agreed upon consideration.”

Non-compete agreements are banned for low-income workers and most entry level positions. The current statute strikes the right balance between preventing abusive non-compete that harm workers and providing necessary flexibility to employers.

The proposed changes would alter the mutually agreed upon consideration standard by making the following two-step requirement: (1) for non-compete agreements enforced by something other than garden leave, the mutually agreed upon consideration in question must be negotiated at the end of employment and; (2) the consideration must be “equivalent” to 50% of the employee’s salary for the duration of the noncompete enforcement.

Non-compete agreements are an essential tool for companies to protect their intellectual property. Valuable internal resources like trade secrets, proprietary processes, client relationships, and strategic plans are essential to protect, especially in the Massachusetts knowledge-based economy.

Key Massachusetts industries like life sciences, medical devices, advanced manufacturing, and research are all uniquely dependent upon intellectual property. AIM believes the agreements are essential to protect these knowledge-based industries.

California does not permit non-compete agreements, but competitor states like North Carolina, Texas and Pennsylvania that target key Massachusetts industries allow for permissive use of those agreements and do not require garden leave or any significant consideration to enforce those agreements.

We respectfully ask the Massachusetts Legislature to reject these changes and preserve the status quo regarding non-compete agreements to protect both workers and employers alike.

Provisions AIM Supports

There are key provisions contained in Governor Healey’s proposal that AIM believes are essential to supporting the state’s business community:

• Reducing LLC Licensing Fees – Mass Wins contains a simple, but important change that will increase entrepreneurship across the state. The legislation lowers the initial fee to form a Limited Liability Corporation (LLC) from $500 to $100. This change is something AIM has long supported and will remove a barrier to new business formation, help innovation, and make it easier for more diverse voices to start a business.
• Global Mass Innovation Access Fund – Mass Wins directs considerable resources to establish a fund that will help the Commonwealth attract international companies and draw them into our state’s economy. Massachusetts is already a leader in the global economy, but an uncooperative federal administration has threatened the appeal of operating in the United States. This $20 million fund will bolster the state’s reputation abroad and will send a clear message that the Commonwealth is open for business.
• Housing Development Policies – The legislation contains crucial housing reforms that will encourage much-needed development. AIM supports two specific changes: (1) new language that codifies the rules for site plan review and (2) new policies that encourage conversions from commercial real estate to housing. The high cost of housing is one of the biggest threats to the state’s economy as we continue to lose working age individuals and families.
• Energy Tax Exemption

Additional AIM Proposals

In addition to our support for the Governor’s economic development legislation, AIM has also submitted three proposals on behalf of members to improve the Commonwealth’s competitiveness:

Rolling Stock – AIM supports a provision that would exempt rolling stock from the Massachusetts sales tax. Rolling stock is an instrument used to transport goods in interstate commerce, like trucks, tractors, and trailers. The Department of Revenue recently issued guidance that any truck that enters Massachusetts for more than six days per year is subject to the full state sales tax.

The Commonwealth relies on the trucking industry to deliver more than 90% of all goods sold within the state. The cost of these goods is impacted by a variety of factors, not the least of which is the actual cost of transporting these goods throughout Massachusetts. Thirty-seven states, including every New England state, do not have – or have capped – sales or use tax on rolling stock. This means that Massachusetts starts as an uncompetitive arena for trucking companies or companies with truck fleets to locate.

A study conducted by the Dukakis Center for Urban and Regional Policy determined that implementing this proposal would result in a net gain in revenue due to the increase in transportation jobs and the sale of parts and accessories necessary to operate rolling stock. Further, this exemption would result in environmental benefits as Massachusetts companies would replace their transportation fleets with new and more fuel-efficient vehicles.

Housing Reforms – AIM is urging lawmakers to add policies to Mass Wins to help unlock development, particularly in multifamily housing. In particular, AIM supports a variety of policies contained in H.1572/S.962 An Act to promote Yes in My Back Yard (YIMBY) and we believe that adopting any of the various provisions in that bill would be an important step forward in increasing housing development.

STARTT Act – The language as contemplated in H.2609/S2160 An Act relative to successful transition and re-entry to tomorrow for incarcerated person (STARTT), would ease the reentry process for incarcerated individuals by ensuring that those individuals receive official state identification such as a driver’s license before their release. Thoughtful proposals like this support incarcerated individuals, who are disproportionately from marginalized communities, in re-entering the workforce while also addressing critical labor shortages, a top concern for our members.