New Jersey Legislators Propose Banning Non-Compete Agreements With Employees Who Can Claim Unemployment

New Jersey state legislators recently proposed A3970, a bill designed to prevent New Jersey businesses from enforcing “non-compete agreements with staffers who can claim unemployment compensation.”

The bill, which is sponsored by Assembly members Joseph Egan and Peter Barnes, was recently referred to the state’s Assembly Labor Committee. If the bill passes, it would invalidate contracts or agreements “not to compete, not to disclose or not to solicit” in cases where individuals qualify for state unemployment benefits. The changes would not apply to preexisting contracts. Theoretically, the bill would eliminate obstacles for workers on unemployment to return to work, thus reducing benefit payments and, by extension, unemployment taxes on employers. However, the legislation will likely face opposition from employers who rely upon non-compete agreements to protect legitimate business interests such as trade secrets and confidential information.

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