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New Jersey law, unemployment benefits and non-compete clauses

April 24, 2013

It is no surprise that in a tough business climate, employers will want to keep the talent that they have and keep that same talent from being used against them. In a country based on freedom, a former employer can’t exactly keep an executive from seeking employment elsewhere with a competitor — or can they?

This type of agreement actually does exist. It is called a non-compete clause. While an employer cannot force the employee to sign, they can include these agreements in employment contracts in New Jersey. The enforcement of these types of clauses depends on how reasonable the restriction is against a person’s ability to work, most often depending on the scope of the restriction and the applicable length of time.

A non-compete agreement might mean that after leaving a company, an employee agrees not to apply for a position with a competitor in the same industry, in the same city and for one year or some other variation of restriction. However, lawmakers are concerned that these types of agreements are adding to unemployment numbers that are already problematic.

A bill was introduced this April in the New Jersey Assembly with the aim of getting more unemployed workers back to earning salaries, and this specifically includes those who are unemployed under one of these restrictive agreements. This bill targets those who qualify for unemployment benefits based on an enforced non-competition, non-solicitation or confidentiality agreement that inhibits their ability to seek employment in the state.

While the bill may have the focus of addressing state budgeting issues, it is the employees who are truly restricted by these clauses. In some cases the clause is overreaching, and an employment attorney can help protect New Jersey workers’ right to earn an income.

Source: North Jersey, “NJ assembly bill could change enforcement of non-compete agreements for employers, employees,” Mary Diduch, April 22, 2013

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