Non-compete agreements (NCAs) have existed since the Middle Ages and can be traced back all the way back to 1811 in the United States. NCAs are regulated at the state level, and though they exist in New Jersey, employment law restricts their enforceability. There has been a growing movement to limit these agreements, which resulted in the Federal Trade Commission (FTC) issuing a final rule banning new noncompetes nationwide as of September 4, 2024, the effective date. But what about NCAs signed before that date?
SCC Legal has a long tradition of providing legal representation to small and mid-sized businesses in New Jersey. We can help when you need a business lawyer in NJ to discuss the non-compete agreement you or your business signed. In this article, we highlight a few key features of NCAs and share how SCC Legal can ensure your business interests are protected.
What Is a Non-Compete Agreement?
For those who may not know, a NCA is a post-employment contract that restricts employees from working for a competitor or starting a business in the same industry within a certain period of time, geographic boundary, or both. NCAs are also called “restrictive covenants” and “no-poach agreements”, but the term “noncompetes” is commonly used. Executives in high-skill, high-paying positions are generally required to sign them, but people with low-wage jobs are also often required to sign such an agreement. There is a view that overbroad NCAs restrict the ability of employees to accept jobs in their chosen careers.
Legal Framework for Non-Compete Agreements in New Jersey
We know the restrictions placed on non-compete agreements by New Jersey employment law, but what does the FTC final rule say about noncompetes signed before the effective date? Existing noncompetes for senior executives remain in force, but are non-enforceable for other workers as of September 4, 2024. It is important to note that the final rule also bans new noncompetes for senior executives as of the effective date, and companies need to find other ways to protect their rights.
Key Considerations for Reasonable Non-Compete Agreement Rulings
It is necessary to know the key considerations for non-compete agreement rulings since noncompetes for senior executives are still enforceable. The law always looks to reasonableness, and New Jersey courts require the following before a non-compete agreement is deemed enforceable:
- Does the agreement protect the legitimate interests of the employer?
- The agreement should not impose undue hardship on the employee.
- The agreement should not be injurious to the public.
The courts further require the agreements to be reasonable in their scope, duration and geographic limit.
How to Protect NJ Business Interests Without Overreaching
Engaging a non-compete lawyer such as SCC Legal is the best way to balance the rights of your executive team while protecting your business in New Jersey. We can review any non-compete clause in your current agreements and discuss other options that prevent employees from revealing proprietary information to outside parties during or after their employment at your company. Let SCC Legal find solutions while you keep the focus where it belongs – on your company’s bottom line.
For more information on business and employment law, or if you want to discuss non-compete agreements further, please contact our team at SCC Legal today or visit us at: https://www.scclegal.com/