• Legislation introduced in New Jersey would significantly restrict the use of post-employment restrictive covenants.
• While the bill is still pending, it highlights a growing trend to limit the use of non-competition agreements in employment.

Currently pending in the New Jersey Legislature is a bill that would upend decades of New Jersey jurisprudence governing restrictive covenants in employment contracts and severance agreements, and impose an array of new requirements for restrictive covenants. The bill, AB 3715/SB 1410, would curtail an employer's ability to require post-employment restrictive covenants with its employees. The bill would not only apply to non-competition provisions, but also to non-solicitation provisions regarding customers/clients and employees as well as confidentiality/non-disclosure provisions. Should the bill pass, New Jersey employers would still be able to require or request that certain employees enter into restrictive covenant agreements as a condition of employment or severance agreement, but only if the post-employment restrictions and agreements complied with the new requirements. The bill would also create a private cause of action against employers that do not implement these new requirements, with potential damages including (among other things) an award of attorneys' fees and costs.

The bill would add a high cost to employers choosing to enter into such agreements, requiring monetary payment to an employee after termination. The bill...

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