Restrictive agreements, such as competition bans or non-injunctions, are generally favoured by the fact that they act as trade restrictions. While some jurisdictions completely prohibit them, most jurisdictions require strict restrictions to protect a legitimate business interest. This means that these agreements must be appropriate in terms of both duration and geographical limitation. For example, a court may find that a national non-competition obligation imposed by a regional enterprise is too restrictive and is not intended to protect a real commercial interest. As a result, restrictions are generally better related to a specific geographic distance from the employer`s location. The standards for determining whether a non-compete agreement or a restrictive competition pact is appropriate in the current circumstances are: 1) it protects the legitimate interests of the employer; 2) there are unreasonable difficulties for individuals; and 3) it causes injury to the public. However, if the staff member does not have access to trade secrets or other confidential or protected information, the agreement cannot be enforced regardless of its terms. In these circumstances, the agreement is considered non-legitimate and considered an illegal and unenforceable trade restriction. The passage of the legislation, with all these proposed requirements, would likely significantly reduce the popularity and prevalence of non-compete agreements in New Jersey.
However, even if the most dramatic provisions are removed, the adoption of legislation that clearly establishes the rules for binding agreements could help clarify agreements that are not applicable to their faces, protect workers from the obligation to enter into unfair agreements, and limit the number of cases to be decided by the courts. It is even more relevant today than it was a year ago. The pandemic has softened resistance to remote work among its former skeptics, whether it be corporate management or individual executives. Employers cannot stand idly by in the face of changing worlds around them. It is time for employers to revoke their existing employment contracts and restrictive agreements and directly address this problem. The final test is whether the application of the non-competition clause would be detrimental to the public. The aim is to look at issues such as the impact of the application on the availability of goods or services in the employer sector and business investment in long-term research and development programmes. A non-compete agreement that amounts to the sale of a business is given more leeway than restrictive agreements that enter into an employment contract. For example, a seller sells a hair salon to a buyer and, as part of the sale, the buyer asks the seller to execute a non-compete agreement prohibiting the seller from working as a hairdresser for five years within a ten-mile radius.