Valid reasons for non-compete obligations

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We recognize the advantages for employers and disadvantages for employees of non-compete obligations in employment contracts. It is estimated that up to 20% of the US workforce is non-compete and that 50% of private sector employers use it to some extent. They serve various purposes, from non-compete obligations to location restrictions for future employment. While state laws differ, with at least three states following the common law that prohibited them altogether, New Jersey generally follows the majority rule that came from owning the Queen’s Bench in 1711 Mitchel v. Reynolds 24 Eng. Rep. 347; they are enforceable when they are reasonable in time and scope. In other words, the restrictions in the agreement must be reasonable. And that can depend on the contractual regulations and, for example, depend on the length of employment covered by the agreement and whether the employee worked for the employer, for a fixed salary or as a business owner for a short or long term, and held the position for the contracting employer.

There is currently no law in New Jersey regulating the issue. In principle, case law protects the legitimate interests of the employer if the non-competition clause is appropriate in terms of time, duration and scope of the restrictions, “protects the legitimate interests of the employer who does not impose undue hardship” [future former] Worker and is not harmful to the public ”and courts can change the agreement or“ blue pen ”to the extent that it is unenforceable. Solari Industries versus Malady, 55 NJ 571, 585 (1970); see also, for example, Karlin v. Vineyard, 77 NJ 408 (1978); Ingersoll-Rand Co. v. Ciavatta, 110 NJ 609 (1988); Community hospital group v. More, 183 NJ 36 (2005). Each case is different depending on the circumstances and the terms of the contract. Certainly the protection of trade secrets and customer lists or contacts and the restrictions and limitations of competition imposed by a highly paid employee with a known name or expertise are important, but such arrangements are anti-competitive and limit a potential employee’s ability to find themselves work or for advertise yourself.


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