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Non-Compete Agreements

Non-Compete Agreements

We are experienced attorneys in the drafting and enforcement or defense of non-compete agreements and restrictive covenants within contracts and as asserted by common law. Generally, a non-compete agreement, also referred to as a restrictive covenant, takes either or both of two (2) main forms. The first form restricts an employee’s ability to work for another employer in the same field in a given geographic area or geographic radius from the prior employer’s location of business for a designated period of time after that employee leaves the employer or is terminated by the employer. The second form restricts for a designated period of time an employee’s ability to solicit, contact or communicate with clients or customers of a prior employer after moving to new employment. There are also other forms of restrictive covenants which may or may not be reasonable.

Under New Jersey law, an employee’s post-employment restrictive covenant is enforceable to the extent that it is “reasonable under the circumstances.” Solari Industries, Inc. v. Malady, 55 N.J. 571, 576 (1970); Platinum Management v. Dahms, 285 N.J. Super. 274 (Law Div. 1995). In Solari, the Court set forth a three-prong test for determining the reasonableness of a restrictive covenant. First, the restriction must be reasonably necessary to protect the employer’s legitimate interest. Second, the restriction must not impose undue hardship on the employee. And third, the restriction must not impair the public interest.

In determining whether the restrictive covenant is reasonably necessary to protect the employer’s legitimate interest and whether the restriction imposes an undue hardship on the employee, the Court will look to the geographical and temporal limitations set forth in the restrictive covenant, along with other factors. Geographical restrictions contained in covenants not to compete must be limited to a definite and reasonable area. Mailman, Ross, etc. v. Edelson, 183 N.J. Super. 434, 441 (Ch. Div. 1982). Such restrictions will not be enforced beyond the area needed to protect the employer’s business. Karlin v. Weinberg, 77 N.J. 408 (1978). Thus, the territory specified in a post-employment restraint may not be greater than that to which the business extends. Rubel & Jensen Corp. v. Rubel, 85 N.J. Super. 27, 37-38 (App. Div. 1964). Similarly, non-solicitation and other forms of restrictive covenants must be evaluated in terms of the relevant case law as to reasonableness.

We are prepared to represent our clients in the prosecution of, or in defense of, injunctive and civil enforcement proceedings related to the alleged breach of non-competition agreements and restrictive covenants on behalf of either the Company or the employee.