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Noncompete Agreements Can Be Challenged in New Jersey

It’s understandable that companies want to keep trade secrets out of the hands of their competitors, which is why many employers require employees to sign noncompete contracts. Employers fear that when an engineer, salesperson, executive or marketer leaves the company to work for a competitor, the new employer will benefit from the new employee’s knowledge of the former employer’s business.

Noncompete contracts, however, can unreasonably restrict employees’ future job opportunities. New Jersey, along with many other states, is now considering legislation that would limit employers’ rights to impose and enforce such agreements. The state makes the argument that such legislation would lower the unemployment rate and reduce requests for unemployment benefits.

The New Jersey Legislature has not yet voted on legislation to curb noncompete agreements, so employees remain vulnerable to the adverse effects of these contracts. The noncompete provisions that employees should be particularly wary of include:

  • Definition of competitor — The noncompete agreement may contain an overly broad definition of the types of companies that constitute competitors. If, for example, the agreement states that any company involved in systems engineering is a competitor, it would be nearly impossible for a systems engineer to take a job that doesn’t violate the contract.
  • Limited job market — For professionals with highly specialized skills, there may be only an extremely limited number of employers that need those skills. Often, those employers are competitors.
  • Geographical reach — The noncompete agreement may contain no geographical limitation or an overly broad one. If the contract bars an employee from jumping to a competitor in the same market area, a court might find the limitation to be reasonable. But if the agreement prevents the employee from working for a similar company anywhere in the United States, a court will be more inclined to find the restriction to be unreasonable.

Noncompete agreements are enforceable only when they protect legitimate employer interests and do not create an unfair hardship on employees. If your employer asks you to sign a noncompete agreement, you should have an attorney review it first. And if your former employer is accusing you of breaching a noncompete contract, you need to mount a strong defense. Speak with an employment law attorney to determine your legal options.

 

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Neil H. Deutsch
Retired

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
Senior Partner

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
Partner

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
Attorney

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
Attorney

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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