When an employee leaves a job, either by their own decision or their employer’s, their ability to get another job in the same field might depend on whether they signed a non-compete agreement with their most recent employer. This type of agreement limits workers’ employment options, arguably to protect the employer’s business. Workers might sign a non-compete agreement as part of their original employment contract or at a later date. New Jersey employment law restricts the enforceability of these agreements, but a new rule from the Federal Trade Commission (FTC) might go much further than state law. The FTC published a final rule in late April 2024 that bans most non-compete agreements nationwide. The rule has not taken effect yet, and it will face legal challenges that could delay its effective date.
What Is a Non-Compete Agreement?
A non-compete agreement is a contract that restricts an employee from accepting a job from a competitor of the employer after their employment relationship ends. It may also bar an employee from starting a competing business.
Employers might view non-compete agreements as a way to protect the investments they make in training employees. An employer’s competitors cannot benefit from the knowledge and experience their employees have acquired. For employees, however, overbroad non-compete agreements can significantly interfere with their ability to find a job in their chosen career.
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