Are Non-Compete Agreements Allowed In New Jersey?
As an employee in New Jersey, an employer may ask you to sign a non-compete agreement or a contract with a non-compete provision. This raises an important question: Are non-competes allowed in New Jersey? The answer is “yes”—but they must meet certain standards. Here, our New Jersey non-compete agreement lawyers explain the most important things that employees in New Jersey need to know about the enforceability of non-compete agreements.
Employee Rights: What is a Non-Compete Agreement?
A non-compete agreement is a contract that prohibits an individual—generally an employee or an independent contractor—from engaging in pre-specified types of commercial (competitive) business activities after the end of their relationship with an employer. Businesses and organizations desire non-compete for many reasons—all of them with their own interests in mind.
Understanding New Jersey Law on the Enforcement of Non-Compete Contracts
The laws on non-compete agreements vary from state-to-state. Some jurisdictions—with California being the most prominent example—essentially prohibit non-compete agreements. However, they are legally valid in most states, including in New Jersey. New Jersey actually lacks a specific state statute that regulates non-compete agreements.
However, the state does have a wide body of case law on non-compete agreements. As explained by the Supreme Court of New Jersey in the case of Maw v. Advanced Clinical Commc’ns, Inc., New Jersey common law requires a “multi-part, fact-intensive inquiry” to determine if a non-compete is enforceable. To be upheld in a New Jersey court, an employer must prove that a non-compete satisfies the following three-part test:
- The non-compete is necessary to protect a legitimate business interest of the employer;
- The non-compete agreement does not cause an undue hardship for the employee; and
- The non-compete agreement does not violate New Jersey public policy.
In other words, a non-compete agreement in New Jersey can be legally enforceable. Though, it will only be enforced against a former employee or independent contractor if the agreement is deemed to be “reasonable” in its scope. It has to both protect a valid commercial interest of the employer and treat the employee in a fair manner.
A Non-Compete Should Be Negotiated and Reviewed By a Lawyer
Non-compete agreements are complicated. The specific circumstances always matter. Before signing a non-compete contract, it is crucial that you consult with an experienced New Jersey employment law attorney. Your lawyer will be able to help you understand the terms of the agreement and negotiate on your behalf, if necessary. You do not want to end up stuck in an overly-burdensome or otherwise unfavorable non-compete agreement that undermines your professional career.
Contact Our New Jersey Non-Compete Agreement Lawyers Today
At Poulos LoPiccolo PC, our New Jersey employment law attorneys are skilled, experienced, and solutions-driven advocates for employees. If you have any questions or concerns about the validity of non-compete contracts, we are more than ready to help. Contact us now for a strictly confidential case evaluation. With an office in Ocean, we draft, negotiate, review, and litigate non-compete agreements in Monmouth County and throughout the surrounding areas in New Jersey.