New Jersey may become the latest state to join the growing trend of states enacting legislation to limit the use of common restrictive covenants, such as non-compete and non-solicitation agreements. In May of 2022, Assembly Bill 3715 (“A3715”) was introduced in the New Jersey legislature which, if passed, would significantly impact employers’ ability to enforce non-compete agreements and impose significant obligations aimed at deterring employers from entering into such agreements.

As background, the longstanding principle in New Jersey has been that reasonable post-employment restrictive covenants are generally enforceable to the extent that they protect the employer’s legitimate interests, do not impose an undue hardship on the employee, and do not cause injury to the public. Provided they are reasonable in scope and duration, New Jersey courts have generally enforced the following restrictive covenants:

  • non-competition agreements;
  • non-solicitation of customer agreements;
  • non-solicitation of employee agreements; 
  • non-disclosure (a/k/a confidentiality) agreements; and
  • assignment of inventions agreements.

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