June 26, 2022

Volume XII, Number 177

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June 24, 2022

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New Jersey Considering Sweeping Non-Compete Legislation

In early May 2022, the New Jersey Legislature introduced a comprehensive bill seeking to regulate and limit the use of non-compete agreements in a multitude of ways. Importantly, if enacted Bill A3715 would require employers to provide 30 business days’ notice of the terms of the non-compete, either before commencement of employment or before the agreement is to become effective. Likewise, A3715 would seek to codify common law regarding the scope of a non-compete, requiring that restrictions be no broader than necessary to protect the employer’s legitimate business interests.

Notably, like the Massachusetts Non-Compete Act, A3715 would require explicit written notice in the agreement that an employee has the right to consult with counsel before signing. Similarly, the proposed bill provides that employers may not use a choice of law provision to avoid the act’s requirements.

Regarding post-employment enforcement, A3715 would limit the temporal scope of non-competes to 12 months following the date of termination. The bill would provide that restrictive covenant agreements with employers cannot restrict an employee from performing work for a customer or client of the employer, provided “the employee does not initiate or solicit the customer or client.” The proposed law also would require employers to provide notice of their intent to enforce the non-compete no later than 10 days after termination. Most notably, the new proposed bill contains a garden leave-type provision that is extremely favorable to employees. This specific provision would require an employer to pay an employee 100 percent of the pay they otherwise would have earned had the employee been able to work to during the restricted period.

A3715 would not apply retroactively to agreements entered into before the bill is enacted. The proposed law would require employers to post a copy of the act in the workplace.

A3715’s varied and sweeping reforms are expected to engender much discussion and debate, and continues the recent trend of many states closely scrutinizing non-competes and attempting to limit the use and enforceability of such restrictions.

Copyright ©2022 Nelson Mullins Riley & Scarborough LLPNational Law Review, Volume XII, Number 136
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About this Author

Mitch Boyarsky Attorney Labor Employment Nelson Mullins New York
Partner

Mitch Boyarsky focuses his practice on labor and employment. He advises clients in a variety of workplace subjects, particularly focused on restrictive covenant, wage and hour, executive contracts matters, transactional employment matters especially related to mergers and acquisitions, disability law compliance measures, and related employment litigation. For more than 25 years, he has represented management in workplace law. Mr. Boyarsky often litigates matters in federal and state court, especially in New Jersey and New York. Such litigations involve alleged employment discrimination,...

646-428-2619
Matthew T. Brown Intellectual Property Attorney Nelson Mullins Boston Law Firm
Senior Associate

Matt’s practice focuses on complex employment and trade secret litigation throughout the United States. He also advises employers and executives on various employment matters, including hiring and termination practices, navigating restrictive covenant issues, protection of intellectual property and trade secrets, worker classification, wage and hour, and discrimination issues. Matt has extensive experience in drafting, negotiating, and enforcing employment, confidentiality, and non-competition agreements.

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617-217-4644
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