Is My Noncompete Preventing Me From Accepting a Job?
Determining the enforceability of your noncompete agreement in New Jersey
on September 4, 2019
Updated on January 20, 2023
In recent years, many companies have required employees and independent contractors to sign noncompete agreements. However, these agreements are not always enforceable under the law. In fact, according to an article published by the American Bar Association (ABA), courts all around the country have become less likely to enforce these non-competition agreements and other restrictive covenants.
“Very often, clients come with the idea that they can’t compete, even though there may be deficiencies in the noncompete that they’re not aware of,” says Bruce L. Atkins, an attorney at Deutsch Atkins in Hackensack. “And the fact of the matter is that the employer really has to have something to protect for it to be enforceable. In other words, you can’t just have every employee sign a noncompete, whether there’s something to protect or not.”
That being said, it is important to recognize that noncompete agreements are handled on a state-by-state basis. Different standards apply in different jurisdictions. In this article, you will find a comprehensive overview of the key things that you need to know about the enforceability of non-compete agreements in New Jersey.
New Jersey Law: Noncompete Enforceability
Unlike some U.S. states, New Jersey does not have a noncompete statute. In other words, there is no specific state law on the books that governs and regulates the use and enforceability of noncompete clauses within employment contracts. Instead, case law applies. In determining whether or not such an agreement is enforceable, New Jersey courts use a three-pronged test that was developed by the state’s Supreme Court in 1970. In order to be enforceable in New Jersey, a noncompete agreement must meet the following three criteria:
- The employer seeking to enforce the non-compete agreement must be protecting a “legitimate business interest,” such as a customer relationship, a trade secret, or confidential information.
- The non-compete must not cause “undue hardship” on the employee or independent contractor.
- The agreement must not be against the public interest.
The more broad and restrictive the terms of the noncompete agreement, the more likely it is that a New Jersey court will rule it to be unenforceable. In general, the employment agreements that are upheld in the state of New Jersey are typically narrow in geographic scope and have a well-defined commercial purpose.
Employees Should Consult With a Lawyer Before Accepting a Position
If you previously signed a non-compete agreement and you are considering taking a new position that you believe might violate the terms, it is best to speak to a law firm or a New Jersey contract law attorney who can offer legal advice and has experience handling non-compete enforceability cases. Whether or not your non-compete is enforceable will depend on a wide range of different factors. A case-by-case assessment will be required.
Employees should always take a proactive approach, says Atkins. An experienced New Jersey contract law attorney will be able to review your noncompete agreement, consider the terms of the new position, and explain your rights and options to you. In some cases, you may be able to accept the new job without any issue. In other cases, it may be advisable to try to negotiate with your former employer to get you released from a non-compete contract so that you do not have to worry about the possibility of facing a lawsuit.
“We’re a competitive nation, and noncompetes are anti-competitive,” says Atkins. “So the concept is that there’s got to be a real good reason for a noncompete to be enforced.”