A non-compete agreement is a legal document that an employer may ask a new hire to sign, which defines prohibited activity upon termination of employment. For example, it may restrict who the employee can work for within a specific geographic area upon termination from the corporation. A non-compete agreement can significantly affect a person’s ability to pursue employment, whether they leave the company voluntarily, or if they are terminated from their position. Careful consideration must be taken when signing this type of contract.
The South Jersey employment lawyers at The Law Offices of Leo B. Dubler, III, LLC are dedicated to helping clients fight for their right to free enterprise and employment opportunities. The firm provides experienced counsel and representation to ensure the stipulations of a non-compete agreement do not limit their client’s legal right to pursue employment.
Enforcement of Non-Compete Agreements
New Jersey is one of many states that recognize the validity of a non-compete agreement. The state’s employment laws support an employer’s legal rights to protect their trade secrets and confidential information. In a court situation, a non-compete agreement is considered a legal and binding contract, especially when the agreement affects the sale of a business.
However, non-compete agreements are not typically enforced by the courts when they deal with a former employee’s right to pursue employment. Reasonableness becomes the vital issue when the court decides to uphold this type of employment contract. While New Jersey law recognizes the importance of protecting a company’s trade secrets and business operations, the courts are also sensitive to an employee who is unfairly limited in their ability to make a living.
A non-compete agreement in New Jersey is generally upheld in the following situations:
- Protect Corporate Trade Secrets: If a former employee with knowledge of the recipe used for a popular product goes to work for a competitor, or leaves to start their own company, using the specific information they have to create a duplicate product would create unfair competition that could hurt their former employer’s profits and business interests.
- Protect Customer Relationships: If an employee leaves a company to work for a competitor, New Jersey courts most often favor the non-compete agreement that stipulates the former employee have no business contact with former customers.
- Does the Non-Compete Agreement Pose Injury to the Public? In most cases, New Jersey courts would enforce the restrictions of a non-compete agreement if the said contract protected the supply of goods and services available to the general public and fostered the corporation’s research and development efforts.
- Protection of a Good Will Agreement in the Sale of a Business: New Jersey state law protects good will interests for a buyer when a business is sold. If a condition of sale prohibits the seller from opening a similar business within a specific geographic area, New Jersey courts would most likely uphold the terms of the contract to protect the buyer’s business interests.
What is a Reasonable Non-Compete Agreement?
Consultation with an experienced and reputable employment lawyer is advisable for any employee about to sign a non-compete agreement. The stipulations within this contract could significantly affect the employee’s career opportunities in the future. There are three primary areas to carefully consider when signing this type of agreement:
- Length of Time: Restrictions imposed for 12-24 months are more likely to be enforced than those that span longer periods of time. The employee must realize the effect this type of limitation will have on their future plans.
- Geographic Area: The limits on where an employee can work after termination with an employer will have a significant impact on their future employment opportunities. New Jersey will uphold restrictions that are reasonable in terms of limiting a corporation’s competition. The employee must consider their future endeavors before agreeing to these stipulations.
- Defining Competitive Aspects: A non-compete agreement is primarily in effect to protect a corporation’s interests, so it is important to define what the employer considers competition. Defining specific corporate competitors and client bases allows the employee to make an informed decision on the impact the non-agreement will have on their future endeavors.
Consultation with a reputable and experienced employment lawyer is vital to successful contract negotiations. An employment lawyer will ensure that their client’s legal rights and best interests are protected within the employment contract and non-compete agreement.
South Jersey Employment Lawyers at The Law Offices of Leo B. Dubler, III, LLC Represent Employees in Contractual Negotiations
If you are an employee in contract negotiations with an employer or you have questions about enforcement of a non-compete agreement, it is advisable to seek legal counsel to ensure your legal rights and future endeavors are protected. Call the Mount Laurel employment lawyers at The Law Offices of Leo B. Dubler, III, LLC at 856-235-7075 to schedule a consultation today or contact us online. Our Mount Laurel and Atlantic City offices serve clients throughout South Jersey, including the areas of Cherry Hill, Burlington County, and Camden County, New Jersey.