Everyone switches jobs, at one point or another. Millennials are increasing the pace, with our generation averaging less than five years per job. But switching jobs is not all about new opportunities, a higher salary, and greater prospects. As always, there are legal considerations that could get in the way of a new and prosperous career.
Non-Compete Agreements can prevent employees who are switching jobs from utilizing client contacts, trade secrets, confidential information and customer relationships. Employers can issue a valid non-compete in a variety of circumstances, such as with an offer of employment, a promise of continued employed, a change in the terms of employment. Typically, you can find your non-compete located in your employment contract.
Luckily for employees, New Jersey has a strong public policy to afford an individual the right to work and pursue a livelihood. Because of that, employers cannot make their employees sign non-competes for nothing in return. Employees must receive consideration in exchange for signing away their future rights. This consideration can come in the form of future employment (when you sign a non-compete in order to start a job), a severance package (when you sign a non-compete after leaving your job),
There are three main requirements for an enforceable non-compete agreement in New Jersey. First, the agreement must protect the legitimate interest of the employer. Second, the agreement must not impose an undue hardship on the employee who is bound by it. Third, the agreement cannot harm the public.
Employers have a legitimate interest in protecting customer relationships, trade secrets, and confidential information. For this reason, employees involved in sales are most common to be bound by non-complete clauses. Salesmen and women not only have customer relationships, but also know confidential information about products and methods. Your old employer is going to do everything it can to stop you from taking this knowledge elsewhere.
To judge if a non-compete poses an undue hardship on the employee, court's look at the likelihood that the employee will find work in his field even with the non-compete, and the burden on the employee. The court measures the burden on the employee by the geographic area proscribed by the agreement, the subject matter of the agreement, and the duration of the agreement. So, if you sign an agreement that forbids you from reaching out to clients in South Jersey for two years in the office supply business, than the court will look at all three of those factors in determining whether to enforce a non-compete.
The above hypothetical agreement would most likely be enforced. In terms of duration, courts normally enforce non-competes of one to five years. The geographic area requirement, however, is more fact specific for each case. Anything from a 10 county restriction, to a thirty-mile restriction, to no restriction at all can be found reasonable or unreasonable depending on the facts of the case and the details of the profession in question.
Lastly, the court will look at the effect on the community. Would you be bringing a product or service that the community would not have otherwise? Even if the employer has a legitimate interest, and the hardship on the employee is not overwhelming, the effect on the community can outweigh the employer's contract rights and allow you to pursue a particular job.
Whenever your employer asks you to forgo your rights by signing a non-compete, it is important to keep these issues in mind. But non-competes are complicated, and before signing or contesting a non-compete, it is important to seek the advice of an attorney.