New Jersey Non-Compete Ban: Understanding S4385 and Its Impact
On May 19, 2025, New Jersey lawmakers introduced Senate Bill 4385 (S4385), a proposal that would significantly restrict non-compete and no-poach agreements statewide. If enacted, the New Jersey noncompete ban 2025 would dramatically change how employers draft and enforce employment contracts and protect confidential information.
Why It Matters for Business Owners
If enacted, this bill would upend how companies in New Jersey use non-compete and no-poach agreements. Many existing contracts could become unenforceable overnight, which could affect how you protect confidential information, customer relationships, and training investments. Employers would need to revise agreements, notify workers, and adjust their approach to retaining talent.
For multi-state companies, New Jersey’s approach could conflict with other states’ rules, creating operational challenges.
Key Provisions
General ban on non-competes. Employers would be barred from requiring, enforcing, or representing that workers are bound by non-compete clauses entered after the law’s effective date. This applies broadly to employees, independent contractors, interns, volunteers, and others.
Notice of invalidation for existing agreements. For non-executive workers, existing non-competes would become unenforceable, and employers would have to notify affected workers within 30 business days.
Tight limits for senior executives. Non-competes with senior executives would be allowed only if they:
Last no more than 12 months after employment ends.
Are limited to the geographic areas and types of services the worker actually performed.
Provide full pay and benefits during the restricted period.
Allow the executive to consult counsel before signing and are not broader than necessary to protect legitimate interests such as trade secrets.
No-poach agreements void. Any agreements between employers not to hire each other’s workers would be declared void and unenforceable.
Private right of action and penalties. Workers could sue to void unlawful clauses, recover damages, and get attorneys’ fees. The state Department of Labor could also issue fines for failure to post notices or provide required disclosures.
Exceptions. Non-competes entered as part of the sale of a business or where a cause of action accrued before the effective date are excluded.
We’re Here to Help
We track proposed state laws closely. Our team can help you understand how S4385 might affect your business, review your existing agreements, and prepare compliant alternatives if the bill passes.