On May 2, 2022, a bill “limiting certain provisions in restrictive covenants” was introduced in the New Jersey State Assembly. In recent years, similar bills have been proposed in various state legislatures. Some such bills, after much lobbying, haggling and revisions, have even been enacted into law, including, for example, in Massachusetts, Illinois and Washington.
While it is unclear whether (and in what form) the New Jersey bill eventually might be enacted into law, the bill as introduced nonetheless is worth a look because it contains a treasure trove of the types of limitations that appear in similar bills introduced nationwide, along with some novel limitations. The bill focuses on provisions in post-employment and severance agreements that restrict or prohibit competition. It includes the following proposed limitations:
Notice to the employee of the restriction – Existing employees must be given 30 business days’ notice of the restriction, while prospective or new employees must be provided with the restriction in writing by the earlier of a formal offer of employment or 30 business days prior to the commencement of employment. While a notice requirement is common in similar bills in other states, the 30-day period proposed in New Jersey is unusually long.
Twelve-month limitation on the duration of any post-employment restriction on the employee’s competitive activities – this is fairly standard in non-compete bills and statutes.
Codification of existing...
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