The New Jersey legislature is taking another crack at imposing significant limitations on noncompete agreements. Its first effort in this regard, a 2022 Assembly Bill which proposed mandatory notice periods, the statutory exclusion of certain workers from noncompete restrictions, and specific criteria for determining the reasonableness of competitive restrictions, expired without being passed.
Now, three years later, the legislature appears to be trying again, but in a much bigger way. There are now two new bills pending before the state Senate (one of which also has been submitted to the Assembly). Both go much further than the 2022 Assembly bill by prohibiting almost all noncompete clauses and no-poach agreements.
The first of the bills (S4385), if signed into law, immediately would invalidate nearly all existing noncompetes and require employers to notify workers of the invalidation within 30 days of the bill’s passage. Such notice must be delivered in writing (by hand-delivered paper, mail, email, or text) and must explicitly provide — among other stark statements — that, “You may seek or accept a job with any company or any person — even if they compete with (employer name).”
While there are carve-outs to this near total ban on noncompetes in S4385, they are very limited. In particular, the bill allows for noncompete agreements only:
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