Non-compete agreements or restrictive covenants are commonly used by employers in New Jersey to prevent their employees from leaving and taking valuable trade secrets, confidential information, and customers with them. These agreements typically prohibit the employee from working for a direct competitor for a certain period of time and within a certain geographical area. While they serve as a tool to protect the employer`s interests, they are not always enforceable.
So, are non-compete agreements in New Jersey enforceable? The answer is not straightforward, as it depends on various factors. The courts in New Jersey have held that non-compete agreements must be reasonable in terms of the duration of the restrictions and the geographic scope. They must also be necessary to protect the employer`s legitimate business interests.
Under New Jersey law, non-compete agreements are enforceable only if they meet the following criteria:
1. The non-compete agreement must be reasonable in scope.
The scope of a non-compete agreement refers to the duration of the restriction and the geographical area covered by the agreement. The non-compete must be limited in duration and geographic scope to be enforceable. Generally speaking, a non-compete agreement that lasts more than two years is considered unreasonable.
2. The non-compete must protect a legitimate business interest.
The non-compete agreement must protect a legitimate business interest such as a company`s trade secrets, confidential information, or customer relationships. It cannot be used to prevent an employee from competing with a former employer in a general sense or to restrict an employee`s ability to earn a living.
3. The non-compete agreement must not be oppressive.
The terms of the non-compete agreement must not be oppressive or overly restrictive. The courts in New Jersey will not enforce a non-compete agreement that is too harsh or unfair to the employee, or that prevents the employee from earning a living.
4. The non-compete agreement must be supported by consideration.
The non-compete agreement must be supported by consideration, which means that the employer must give the employee something of value in exchange for signing the agreement. This could be a signing bonus, a raise, additional benefits, or continued employment.
In summary, non-compete agreements are enforceable in New Jersey as long as they meet the four criteria outlined above. If the agreement is overly broad or oppressive, it may not be enforceable. It`s important for both employers and employees to understand the implications of non-compete agreements and to seek legal advice before entering into any such agreement.