Many employers in New Jersey use non-compete agreements with some employees. Non-compete agreements generally stipulate than an employee cannot leave the company to go work for a competitor. Or, if the employee can work for a competitor, the employee cannot solicit his or her previous employer's customers. Such agreements might also state that employees cannot share company secrets with any competitors.
In general, in order to be enforceable these agreements have to be limited in terms of timeline and geography. Typically, a non-compete agreement can only be binding for a year or two, and it should be limited to one particular marketplace. The particulars of those issues vary from state to state. New Jersey is now moving to restrict non-compete agreements even further, and both employers and employees in the state should pay attention to this legislation.
New Jersey is among at least four states that are working to decrease the enforcement of non-compete agreements. Proponents of the bill in New Jersey say that it will allow a number of unemployed people to head back to work and get off of unemployment benefits. If passed into law, the bill would void any non-compete agreement for those who qualify for unemployment benefits.
The bill is currently only in a committee and thus not ready for a vote, but it appears that a movement to curb non-compete agreements is gaining ground.
Employers and employees would be wise to pay attention to non-compete developments and seek legal counsel should it become necessary. Many employers do see non-compete covenants as a way to protect their businesses, but for many employees, it may seem that non-competes restrict their livelihood. Both sides should seek legal representation when entering into a non-compete or dealing with non-compete enforcement.
Source: Forbes, "New Jersey Joins Wave Of States Considering Limitations on Noncompete Agreements," Betty Graumlich, April 16, 2013
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