Assemblyman Anthony Verrelli’s bill to prohibit the use of non-compete clauses, with certain exceptions, and no-poach agreements cleared the Assembly Labor Committee today. Bill A5708 seeks to strengthen workers’ rights and encourage fair competition in the labor market.
“Workers deserve the ability to pursue new opportunities without being shackled by outdated and restrictive agreements,” said Assemblyman Verrelli (D-Hunterdon, Mercer), Chair of the Assembly Labor Committee. “By prohibiting non-compete clauses and no-poach agreements, we are standing up for workers’ rights, promoting a healthier labor market, and creating a level playing field for businesses across our state.”
Under the bill, no employer – whether public, private, or nonprofit – would be allowed to require, demand, or accept a non-compete agreement for any employee or other individual who provides services for, or on behalf of, the employer. Additionally, every contract restraining an individual from engaging in lawful professions, trades, or businesses after employment termination would to that extent be void.
The bill would include exceptions to ensure that legitimate business interests, such as trade secrets, are protected without restricting worker mobility. Similarly, non-compete agreements established during the sale of a business entity, its operating assets, or ownership interests are allowed. Existing non-compete agreements with senior executives would also remain valid if they meet specific requirements.
The bill would also explicitly ban no-poach agreements where employers agree not to hire each other’s employees or former employees.
A5708 would note that there must be no retaliation against workers who exercise their rights under this bill.
Assemblyman Verrelli, who has been a proud union member for 35 years, noted that legislation stems from a landmark finding from the Federal Trade Commission that non-compete clauses trap workers and hold back the economy.