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Noncompete Reform Dropped As Mass. Lawmakers Reach Economic Development Deal

BOSTON — State legislators late Wednesday reached a compromise economic development bill that would, among other measures, kill noncompete reform, expand liquor licensing authority to the city of Boston, and create a sales tax holiday weekend for Aug. 16-17.

Boston’s tech community had lobbied for reform of noncompete agreements, which can bar employees from working for a competitor for several years. Reform supporters say noncompetes slow the innovation economy and weaken Massachusetts’ competitiveness relative to Silicon Valley in California, where noncompetes are outlawed.

The Patrick administration had called for a complete ban of noncompete agreements. The measure then divided the Legislature. The Senate passed some limitations on noncompetes, but the House left reform off its economic development package. A six-member conference committee worked out the final legislation, which is set for a vote on Thursday.

The Greater Boston Chamber of Commerce praised lawmakers for leaving the existing law in place and called on Gov. Deval Patrick to sign the economic development bill.

“We believe the state’s current law on non-competes strikes an appropriate balance between protecting employers’ interests and allowing employee mobility,” chamber President Paul Guzzi said in a statement. He also lauded the bill’s proposed creation of a state-level Financial Services Advisory Council, designed to further one of Massachusetts’ big industries.

The New England Venture Capital Association expressed disappointment with the final bill.

“The interests of our citizens and our state’s economic wellbeing must come before the protection of power that a few companies enjoy wielding,” the group said in a statement, adding its members “will continue to fight to ban noncompetes in Massachusetts.”

In a nod to the state’s tech sector, the legislation pilots a three-year program for entrepreneurs-in-residence at UMass Boston and UMass Lowell.

The compromise economic development bill also gives Boston Mayor Marty Walsh (a former state lawmaker) the authority to appoint his own licensing board, and gives the city more liquor licenses. But it stopped short of eliminating the statewide cap for all other cities and towns, as the Senate and Patrick had proposed.

Meanwhile, lawmakers decided once again to give shoppers a break from the state’s sales tax, this time on the third weekend of August. If signed by the governor, the bill would waive the 6.25 percent state sales tax for purchases under $2,500.

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