You will easily see that non-compete agreements are a different species of contract. Unlike employment contracts, a non-compete agreement is inherently anti-competitive and restricts freedom of contract. This contradicts basic precepts of American and New Jersey public policy. For this reason, some states outlaw the use of non-compete agreements altogether. Most states allow them, however, within limits, and New Jersey is among these. This means that non-compete agreements must be limited and reasonable as to duration and geographic scope and must also go no further than necessary to protect the employer's legitimate business interests. Two years is usually the maximum duration that courts will allow. The geographic scope that will be considered reasonable depends upon the job. It might be unreasonable to bar the employee of a bagel shop from working more than two miles from the employer's establishment. On the other hand, it might be reasonable to ban a highly specialized consultant from working anywhere in the United States. This issue has become increasingly complex with the proliferation of businesses that work across state and national borders, primarily through electronic media. In addition, the non-compete agreement must fairly balance the employer's needs against those of the affected employee.
Non-compete agreements can be imposed by an employment contract, a separate non-compete contract, at the beginning of the employment relationship, during it, or as a condition of receiving a severance package.
Options for Protecting Yourself From an Unfair Agreement
From the perspective of an employee who wants to protect her right to the employment of her choosing in the face of a non-compete, there are options. Among others, they include negotiating out of it, negotiating in advance to limit its scope, and challenging it in court. In court, the agreement could be invalidated, or the court might decide to "blue pencil" it. Blue penciling means that the court can modify the terms of the agreement to make it fair for both employer and employee.
Non-compete agreements are critically important to you as an employee. They can spell the difference between pursuing the career you want and having to sit on the sidelines for years in order because of a company you no longer work for. The law here is complex, and you will not want to make a mistake. If you have questions, feel free to contact Steinberg Law by phone or using our contact form.