Question

Is My Noncompete Agreement Enforceable In New Jersey?

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Bruce L. Atkins

Answered by:
Bruce L. Atkins

Located in Hackensack, NJ
Deutsch Atkins, P.C.

Bruce L. Atkins - Employment Litigation - Super Lawyers

Answered by: Bruce L. Atkins

Deutsch Atkins, P.C.
Hackensack, NJ
Phone: 201-498-0900
Fax: 201-498-0909

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Answer

At the present time there is legislation pending in New Jersey that might drastically redefine when and whether noncompetes may be upheld or enforceable.  Under the current law in New Jersey, while noncompetes are disfavored, they may be enforceable if the scope and duration of the noncompete agreement are reasonable.

New Jersey courts evaluate three factors to determine the enforceability of a noncompete agreement. First, the employer must have a legitimate protectable interest. Second, the agreement must not cause the employee to undergo undue hardship. Finally, the courts will determine if the contract goes against public interests. 

What Are Noncompete And Nonsolicitation Agreements? 

Noncompete agreements prevent employees from competing with their employer for a certain period after the employment ends. Nonsolicitation Agreements prevent employers from soliciting clients or employees of the former employee. 

Employers are supposed to use these contracts to prevent confidential information and trade secrets from falling into the hands of their competitors. The use of noncompetes is a common practice in a variety of industries such as computer software and health care.  However, there are times where employers attempt to misuse noncompetes simply to prevent employees from leaving their employ.

Does Your Employer Have A Legitimate Protectable Interest? 

Noncompete agreements are established to protect employers and their interests. However, not all interests can be protected through noncompetes. An employer must have legitimate protectable interests, typically involving confidential or proprietary information that is not available to the public. Protectable interests can include trade secrets, sales data, training procedures, and other confidential material. 

Does The Agreement Pose An Undue Hardship On The Employee? 

It is unlawful for noncompete agreements to place an undue hardship on employees. Undue hardships can stem from a variety of circumstances, including the manner in which the employment relationship ended, the employability of the employee, and the scope and duration of the noncompete. Courts will consider whether the agreement impacts the likelihood of the employee finding any position in the same industry. In addition, they will review the reasons you are leaving the position and whether the agreement was executed voluntarily. 

Does The Noncompete Agreement Go Against Public Interests? 

Courts must not only balance the interests of employers and employees, but also the interests of the public. Certain contracts may adversely affect the general public’s welfare, for example the public’s ability to invest, advance public policies, obtain critical services, and even hinder medical and technological research.  For example, it is typically against public interests for practicing attorneys to be bound by noncompetes. 

A seasoned employment lawyer can help you to better understand public interests as they relate to your own contract. 

Can I Challenge My Employer’s Noncompete Agreement? 

Typically, the employer files a legal action seeking to enjoin the employee and his/her new employer from violating the terms of the noncompete.  Employees who have not disclosed the existence of a noncompete to a new employer can be fired for failing to disclose the noncompete. 

In certain circumstances, the employee may be able to challenge the enforceability of the noncompete by seeking a declaratory judgment.  More commonly, employees utilize counsel and/or the assistance of the new employer to settle disputes with the former employer pertaining to the noncompete in a manner that truly protects the legitimate interest of the former employer and is fairer to the employee.

If you cannot settle the dispute, your employer may seek injunctive relief to enforce the agreement or request a temporary restraining order to prevent you from going to a new employer.  

Notably, employees may have separate grounds for wrongful termination claims that can be a factor in whether noncompete provisions are unenforceable. 

Obtaining Legal Counsel Is Imperative 

Employment attorneys know your rights under the law. They can put you at a great advantage in negotiations challenging provisions within the contract. In cases where the agreement is overly broad in duration and geographic scope, or where the employer does not have legitimate protectable interests, your lawyer can oftentimes fight to narrow the scope, protect your interests, and help both parties avoid litigation over the enforcement of a noncompete.

Disclaimer: The answer is intended to be for informational purposes only. It should not be relied on as legal advice, nor construed as a form of attorney-client relationship.

Disclaimer: The answer is intended to be for informational purposes only. It should not be relied on as legal advice, nor construed as a form of attorney-client relationship.

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