This past week, President Joe Biden asked the Federal Trade Commission to ban or limit non-compete agreements, saying that in many cases they are being misused in order to keep wages low rather than to protect any legitimate business interests. While many states have already outlawed the use of these restrictive covenants, many of New Jersey’s businesses continue to use them. Regulations have been introduced in the state assembly, but while awaiting approval the state’s courts have yet to indicate a distaste for the agreements that they are being asked to review – particularly in situations where the pacts seem necessary to prevent the sharing of trade secrets or proprietary information.

One of the industries that is seeing a significant amount of litigation surrounding employees moving to competing companies is solar power sales, a business that is seen as having tremendous growth potential. Employees ranging from installers to managers are moving from company to company in apparent violation of signed agreements, with employees arguing that the rules are too restrictive and employers looking to attract new talent arguing that they are quashing competition. The courts are viewing each agreement in terms of whether they are focused to the specific business and to a stated goal such as safeguarding intellectual property or trade secrets rather than being retaliatory or overly restrictive.

The legislation that has been proposed in the New Jersey state assembly would establish certain groups as being exempt from noncompete clauses, including those who have been at a job for less than one year, those low-paid employees who are nonexempt from overtime pay, and those terminated without a determination of misconduct.

While non-compete agreements are particularly valuable to industries where trade secrets are common and where the sharing of them could jeopardize a business’ competitive edge, there are many other situations like those that President Biden is trying to prevent, where low-paid employees find their ability to leave one job for a higher-paying opportunity is jeopardized. If you are concerned that you are being unfairly restricted by a non-compete agreement that you’ve signed or you have been asked to sign an agreement and you’re not sure whether you should do so, contact the employment attorneys at Schorr & Associates today to set up a time to discuss your situation. We are here to help.