Could New Jersey soon join states banning all non-compete agreements?

After a federal move to ban non-compete agreements has been caught up in court, New Jersey has begun considering a measure that would tackle the agreements at a state level.

Late last summer, a federal court in Texas found that a Federal Trade Commission rule was unlawful, in prohibiting most non-compete agreements.

The FTC has been appealing the Texas court’s decision to the Fifth Circuit.

For now, employers nationwide can continue to enforce non-compete clauses with their staff.

In May, Democratic state legislators introduced a measure that would ban non-compete clauses across New Jersey.

If passed and signed into law, New Jersey would follow four states with full bans on non-compete agreements.

As of mid-2025, the states banning all non-competes are Minnesota, North Dakota, Oklahoma and California.

State Senators Joseph Lagana and Joe Cryan, of Bergen and Union, and Assemblyman Anthony Verrelli, of Mercer County, introduced the bill that was referred to their respective Labor Committee.

Any worker who is not a senior executive, would face no restrictions on being able to work for a direct competitor or starting a business in direct competition.

If it becomes law, it would apply to pre-existing non-compete clauses.

As for senior executives, there would be very specific parameters around a non-compete, including that it could not last longer than 12 months and “not be broader than necessary to protect the legitimate business interests of the employer.”

That applies to an employer’s trade secrets or other confidential information, including sales information, business strategies and plans, customer information, and price information.

The proposed measure also would consider any no-poach agreements void, based on them being “contrary to public policy.”

In addition to the four states with full bans on non-competes, New York came close to enacting such a law last year, regardless of wage or income level.

New York Gov. Kathy Hochul vetoed a measure that state lawmakers had passed, while saying she wanted to “strike a balance” between protecting workers and “allowing New York’s businesses to retain highly compensated talent.”

A modified bill was introduced in New York in February, Shepard Mullin reported.

Nebraska has also prohibited “traditional” non-competes and only restricts a former employee from doing business with customers they first dealt with while at a former employer.

A number of other states do have limitations on how long a non-compete can last for — or a salary range in which such restrictions are enforceable, according to employment law platform, sixfifty.com.

Illinois has a wage threshold — meaning an employee must earn more than $75,000 a year in order to face a non-compete. The state also has a number of professions exempt from such agreements.

In Colorado, the wage threshold is higher: non-competes are only valid for an employee earning at least $127,091 a year.

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