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Will a New Jersey Court Enforce the Non-Compete in Your Employment Contract?

The impact of non-compete agreements increases when jobs are scarce and business competition is intense. A non-compete clause in an employment contract or severance agreement can serve a legitimate function, such as providing a company breathing room to hire and train new employees. We often receive inquiries from employees about the enforceability of a non-compete clause in their employment contract or separation agreement.

Many times employers use these documents to overreach by imposing unreasonable geographic and time restrictions that effectively prevent an employee from continuing in his or her chosen occupation. Although non-compete covenants may be enforceable, there are limits that prevent unreasonable burdens on employees based on their scope.

Criteria used to evaluate enforceability of a covenant not to compete

As a general rule, non-compete provisions are viewed unfavorably by New Jersey courts because of their tendency to interfere with an employee’s ability to use his or her training, education and experience to continue in a chosen occupation. While the right of an employer to enforce a non-compete contract turns on the specific terms of the agreement and surrounding circumstances, our attorneys have some insight into the factors considered by a court.

There are essentially three requirements that must be met for a non-compete to be upheld:

  • It safeguards the legitimate interest of the employer
  • The provision does not create an undue hardship for the employee
  • Enforcement does not create an undue hardship for the public

While a range of employer interests may constitute a legitimate basis for a non-compete clause, those that are upheld most often include attempts to protect trade secrets and other intellectual property. Employers typically are not permitted to use the protections of a non-compete clause simply to limit legitimate competition.

New Jersey courts evaluating the impact of a non-compete on an employee tend to consider the likelihood that the employee will be able to secure alternative employment in one’s occupation. The probability that a court will find a non-compete unenforceable will also depend on whether an employee was subject to involuntary termination without cause.

The court will also consider the impact on the public from enforcement of the provision, based on access to professionals in the geographical region.

Courts look at the duration and geographical coverage of a non-compete agreement to determine if the provision is reasonable and enforceable. When these employment agreement provisions extend beyond two years or geographically beyond where the company actually engages in business, there is an increased chance the non-compete will not be enforced.

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Neil H. Deutsch

About Neil H. Deutsch has been practicing law for over 35 years and is known as a skilled negotiator in employment and discrimination law. He believes in a bottom-line approach of risk analysis and cost effectiveness for his clients. "Case evaluation is something we take seriously," says Mr. Deutsch who seeks top net dollar for…

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Bruce L. Atkins
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About Bruce L. Atkins is regarded as one of New Jersey’s premier practitioners of employment and civil litigation. He has been selected to the New Jersey Super Lawyers prestigious list every year since 2005.  This honor, bestowed upon a recipient by the votes of his peers, is a powerful nod to the skill Mr. Atkins…

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Adam J. Kleinfeldt

About Adam J. Kleinfeldt joined Deutsch Atkins & Kleinfeldt, P.C. in March of 2015.  He primarily represents individuals in employment litigations such as discrimination, retaliation, and whistle blowing matters.  He has extensive experience in all phases of the litigation process. Adam has obtained significant results for some of his clients, including a $525,000 jury verdict…

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Diane Englander Peyser

About Diane Englander Peyser joined Deutsch Atkins & Kleinfeldt, P.C. in September 2018 where she represents employees in wrongful termination, retaliation, harassment, and discrimination matters. Prior to joining Deutsch Atkins & Kleinfeldt, P.C., Diane represented clients in all aspects of employment law on behalf of employees involving unemployment appeals, claims of sexual harassment, LGBT discrimination,…

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Debra M. McGarvey

About Debra M. McGarvey joined Deutsch Atkins & Kleinfeldt, P.C. in December 2019. She has extensive experience defending employees and employers in state and federal court in employment litigation matters. She has represented clients on various issues arising out of the New Jersey Law Against Discrimination (NJLAD), the New Jersey Conscientious Employee Protection Act (CEPA),…

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