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Non-compete Agreements in New Jersey

On Behalf of | May 22, 2018 | Firm News |


A large portion of my practice involves reviewing non-compete agreements for employees who are starting new jobs as well as those bound by non-competes looking to make a job change. 

Non-compete agreements restrain the circumstances under which you can leave your job to take another one, especially if you are intending to work in the same industry and geographical location.  Such contracts may prevent you from working for a year or even more.  Courts generally do not like restraints on an employee’s ability to earn a living and scrutinize non-compete agreements to make sure that they are very limited in their scope and narrowly tailored to serve the employer’s interest being protected.

Generally, employers use non-competes to discourage employees with specialized skills and with access to special proprietary information from leaving and going to work for a competitor.  Generally, non-competes should be directed at high level, c-suite employees with access to company information that, if released, would be very harmful to the company business, its proprietary technology or formulas etc. 

Non-competes can be presented to employees either at the start of employment or mid-way through employment and need to be supported by some consideration (something given in exchange for the agreement).  If signed at the start of the job, the acceptance of employment is sufficient consideration.  If signed mid-way through the job, the employer may offer vacation days or some other minimal benefit as sufficient consideration for the non-compete.  Note that often the consideration given in exchange for the agreement not to complete bears no relation to the amount of time you would spend out of the job market.   

With this analysis in mind, consider the non-compete you may already have or one that you are being asked to sign.  Consider whether you are able to translate your employment skills to another industry and realistically find a job in that industry if you are precluded from working in the one where you have the most experience and expertise.  Consider what is being offered in exchange for your agreement not to compete and work in your field to determine whether you can realistically remain bound by the non-compete should you leave the job.  But first of all, consider whether you are the right type of employee to be bound by such an agreement.

My next blog will focus on the appropriate use of non-compete agreements and current legislation pending to regulate the use of non-competes in NJ.