New Jersey non compete agreements are designed to protect both employers and employees. The law states that no business’s legitimate interests should be threatened, either through the sale of their business or through the actions taken by an employee. Most employment contracts include a non compete agreement that the potential employee is required to sign. Most new employees sign these documents without understanding the details and purpose of the agreement. Before signing a legal document as part of your employment, do your due diligence and find an experienced contract attorney to help guide you through the details of the document. Read on for a basic overview of non competes and employment law.
Types of Non Compete Agreements
There are two main categories of non compete agreements. There are those non compete agreements that deal with the sale of a company and those that deal with employment within a company. Of the two, cases revolving around the sale of a company are far more commonly enforced. The reason for this lies in the amount of time and money involved in litigating an agreement or employment contract. While non compete agreements related to the sale of a company are subjected to significantly fewer restrictions than employee non competes, both are required to adhere to what the courts of New Jersey determine to be reasonable. For example, if the owner of a nail salon sells the business to a new buyer, that buyer has the reasonable expectation that the owner will not open a new nail salon a block away. The buyer, however, could not reasonably expect the previous owner not to open a new nail salon in the next county, so long as he or she is not soliciting the existing customer base to use the new salon location.
Requirements For A Non-Compete Agreement
In order for the state of New Jersey to consider a non compete agreement enforceable, it must meet the following three criteria:
1. The non compete agreement must protect the legitimate interests of the employer.
2. The non compete agreement must not impose undue hardship on the employee.
3. The non compete agreement must not be injurious to the public.
Let’s look at each of these criteria in more detail:
1. Protecting Legitimate Interests of the Employer: Eliminating competition is not considered a legitimate interest of an employer. Protecting trade secrets, relationships with existing customers and all other confidential information gleaned during an employee’s tenure with the company is considered a legitimate interest of an employer. Employers have the right to ensure that relationships built by an employee during his or her employment with the company are not used to build up the employee’s own business or generate profit for another company.
2. Imposing Undue Hardship on an Employee: In order for a non compete to be enforceable, it must not impose undue hardship on an employee. This means that the non compete agreement must be “reasonable in geographic area, duration and subject matter.” Furthermore, if the employee quits–as opposed to being fired–a court is less likely to find a non compete agreement enforceable.
3. Injury to The Public: In order for a non compete agreement to be considered non injurious to the public, extensive research into the effects that the enforcement of the agreement would have on the availability of goods and services is required. If enforcement is found to have a significant negative impact on the availability of goods and services to the residents of the area served, the agreement will not meet enforcement criteria.
Seeking Legal Counsel: Litigating A Non Compete Agreement
In general, there are three situations in which a non-compete agreement employment contract is required. These include the sale of your business, the hiring of a new employee or the promotion of a current employee. Drawing up a legally enforceable non compete agreement is best left to employment law specialists. If you need help with the creation of a non compete contract, or if you believe you have been the victim of a violation that has cost your business money, research the best employment attorneys in your area. Call and request a consultation. An experienced attorney will be able to either help you draft an agreement or determine whether a previous agreement has been violated, and if you are entitled to compensation.
