New Jersey’s Proposed Non-Compete Laws Favor Employees

Non-compete contracts have become an increasingly concerning problem across the United States. Though traditionally viewed as unenforceable, overly rigorous language introduced in recent years has changed that perspective, attracting the attention of legislators who see the restrictions as punitive and who worry that they have the potential of blocking employees from seeking advancement within their fields or alternative employment in general. To address the issue, the state of New Jersey is considering new laws to clarify the circumstances under which an employer can control their employees’ activities after they’ve separated. The proposed terms will protect many who have previously been negatively impacted by aggressive non-compete terms.

Though the state of New Jersey recognizes that there are some situations where employers’ trade secrets and confidential information does require protection, it also recognizes that employees need the ability to find new employment. To that end, the proposed bill indicates that any non-compete agreement “shall not be broader than necessary to protect the legitimate business interests of the employer, including the employer’s trade secrets or other confidential information that would not otherwise qualify as a trade secret, including sales information, business strategies and plans, customer information, and price information.” In restricting the definition of those legitimate business interests and when they would be considered necessary, the legislature would allow employers to protect themselves, but only for a limited period of time and in a limited way. Restrictions would be placed on the agreements, including allowing employees a full 30 days to review the terms of a non-compete agreement with an attorney, and placing a 12-month limit on all restrictions.

The proposed New Jersey law would protect New Jersey state residents working outside of the state by nullifying any “choice-of-law” provisions that might apply to their detriment and would require any employer that plans to enforce a non-compete agreement to notify the employee within 10 days of termination. One of the most important terms covered in the proposed New Jersey law is a restriction that limits non-compete terms to regions in which the employee provided services in the previous two years and to the specific work that the employee had been doing. This is in direct contradiction to some of the practices that have recently been attempted by unethical employers, who have notably attempted to keep employees from working at companies that provide the same type of product that they do, regardless of the employee’s role within the company or how far away the new employer is located.

One of the most notable provisions of the proposed bill is raising strong objections from employers: the “garden leave” requirement would require employers imposing a non-compete agreement to provide full pay and benefits to employees who have left them during the time that the restriction is in place.

The New Jersey non-compete laws are clearly meant to ensure that employees do not face undue burdens as a result of an agreement that their employer requires them to sign. Employees who find themselves facing burdensome restrictions as a result of a non-compete agreement should seek assistance from our employment law firm in New Jersey.

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