Will New Jersey Propose a Ban on New Jersey Non-Compete Agreements?

New Jersey enforces non-compete agreements that are found to be limited in time, geographic scope and limited to protect the legitimate business interests of the Company.  On April 10, 2014, Massachusetts’ Governor Deval Patrick proposed an economic development plan that would ban non-compete agreements and restrictive covenants within the state.  The stated reason for banning the non-compete agreements was that it prevents the flow of talent to different companies and often times is not necessary to protect any legitimate business interest.

One of the biggest issues we have found with non-competes is the difficulty for clients to find alternate employment and support their families after being terminated from a job.  The company made the decision to terminate the employee and now the employee can’t work for any other companies in the industry for 2 years because of the non-compete agreement that was required to be signed before beginning the job.  We believe that legislation should be passed that limit the use of non-compete agreements and require them to set forth with specificity the legitimate business interests that are being protected.  Also, we would suggest that a company who terminates an employee and wishes to enforce a non-compete agreement should be required to pay the employee during the non-compete period.  This would balance the hardships and demonstrate the value of forcing the employee not to compete while allowing the employee to support herself.

More thought needs to be put into non-competes and limit their use in the workplace.  Non-competes have become some commonplace that we have met employees who worked in the mail room have a non-compete agreement preventing them from working for a competitor.  It is that type of abuse that requires a law in the State of New Jersey to limit the use of non-compete agreements.  An employee who is dealing with customers or proprietary information should not be prevented from working for any competitor.