On May 19, 2025, the New Jersey legislature followed in New York’s footsteps and introduced two bills, S.B. 4385 and S.B. 4386, seeking to significantly curtail, if not totally ban, the use of non-compete clauses in the employment relationship.
General Prohibitions
S.B. 4385 aims to ban “no-poach” agreements and non-compete clauses for most workers, even those agreements or clauses entered into before the bill is signed into law.
The proposed bill defines a “non-compete clause” broadly to mean any agreement arising out of an “existing or anticipated employment relationship” that prohibits, penalizes, prevents, or hinders a worker from seeking or accepting work with a different employer after the employment relationship ends, or from operating a business after the employment relationship ends. Severance agreements and workplace policies fall within this definition. The proposed bill also renders “no-poach” agreements, an agreement between two employers to not hire each other’s workers, void and unenforceable, as such agreement would hinder a worker’s ability to obtain employment.
Limited Exceptions
As currently drafted, S.B. 4385 provides for few exceptions to the encompassing ban. These exceptions include non-compete clauses entered into pursuant to the sale of a business, where the cause of action relating to the non-compete clause accrued prior to effective date of the ban, and existing non-compete clauses for senior executives entered into prior to the...
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