Legislation (A-1650) that would limit certain provisions in and the enforceability of noncompete agreements was reported out of the state Assembly Labor Committee on Feb. 24, 2021.

The bill would restrict an employer’s ability to utilize noncompete clauses to protect his or her business interests. If the bill becomes law, an employer would be able to require an employee to sign a noncompete agreement—but only if the agreement meets certain requirements. These requirements would include providing an employee or potential employee with at least 30 days to review the agreement before it goes into effect, and limiting the duration of the agreement to no longer than 12 months.

While many agencies do not use noncompete agreements, nonsolicitation and nondisclosure agreements are used regularly. This legislation appears to exclude those types of agreements because they are referenced specifically as acceptable alternatives to noncompetes.

PIANJ actively is working to ensure that nonsolicitation and nondisclosure agreements are excluded from the legislation. Any restriction to use these alternative agreements could have a devastating impact on insurance agencies. Customer lists are crucial to an agency’s value, and nonsolicitation agreements are vital to an agency’s ability to protect those lists. Without access to this information, an agency would be at the mercy of its employees and agency values would plummet.

PIA continues to advocate for its members to ensure their interests are protected. Track this and other bills with the PIAdvocacy bill tracker.