New Jersey Legislators Considering Significant Changes to the Law on Non-compete Agreements

Non-compete agreements are promises by employees not to compete with their employer during their tenure at the company and for some time thereafter. These contracts are subject to certain legal restrictions, so that former employees aren’t unfairly prevented from taking a new position. Overbroad restrictions also impede economic development by encouraging skilled labor to seek work outside the state and preventing other employers from hiring locally.

Recognizing these problems, Union County Assemblywoman Annette Quijano has introduced a bill to impose further regulations on the use of non-compete agreements. If enacted into law as currently written, it will, among other things:

• Require the employer to give the employee advance notice of the agreement and the right to consult an attorney before signing it
• Limit the duration of the agreement to a period of 12 months following separation from the job
• Limit the scope of the agreement to what is necessary to protect the employer’s legitimate business interests without creating an undue burden to the employee
• Protect the employee’s right to challenge the agreement’s validity and enforceability in court
• Limit which kinds of employees the agreement may be enforced against
• Prevent the agreement’s enforcement against employees who are laid off or discharged without cause
• Require the employer to continue paying the employee their full wages and fringe benefits throughout the duration of the non-compete agreement, unless the employee was discharged for cause

If the employer violates any of the bill’s requirements, the employee would have the right to sue the employer to enjoin the violation and to obtain liquidated damages of up to $10,000, lost compensation, other damages, and reasonable attorney fees and costs. The plaintiff would have two years to bring suit.

The bill has yet to pass either house of the Legislature or to be signed into law by the Governor. Until then, New Jersey employees and ex-employees who are subject to non-compete agreements might already have legal grounds to challenge those agreements’ validity or enforceability.

If you feel trapped by a non-compete agreement, one of our knowledgeable employment lawyers can advise you on its legality. Should the agreement run counter to state law, Deutsch Atkins & Kleinfeldt, P.C. can represent you in a lawsuit against your ex-employer. We handle a wide array of New Jersey employment law issues. You may schedule a consultation in our Hackensack office by contacting us online or calling us at 551-245-8894.