New Jersey Gets Closer to Restricting Non-Compete Agreements

New Jersey Gets Closer to Restricting Non-Compete Agreements

May 15, 2018

In December 2017, we blogged about New Jersey Senate bill SB3518, which set forth sweeping restrictions that would limit the enforceability of non-compete agreements. Last week, the New Jersey Assembly Labor Committee approved Assembly Bill A1769, which mirrors SB3518, and if enacted, would further restrict non-compete agreements.

Under the original bill, a non-compete would have been enforceable against an employee who was terminated for "good cause." The revised bill replaces "good cause" with "misconduct" throughout the entirety of the bill. "Misconduct" is defined in the bill to include conduct that is:

Improper, intentional, connected with the individual’s work, within the individual’s control, not a good faith error of judgment or discretion, and is either a deliberate refusal, without good cause, to comply with the employer’s lawful and reasonable rules made known to the employee or a deliberate disregard of standards of behavior the employer has a reasonable right to expect, including reasonable safety standards and reasonable standards for a workplace free of drug and substance abuse.

These revisions place even further restrictions on the use and enforceability of non-compete agreements in New Jersey. The December 2017 blog post, which sets forth the details of the proposed law, is available here.