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The basics of non-compete agreements

On Behalf of | Nov 12, 2021 | Non-Compete Agreements

You may have heard of non-compete agreements before and not really understood the full scope of their powers in New Jersey. You may already know that many non-compete agreements are enforceable. The question is, when is a non-compete agreement non-enforceable? Here’s what you need to know.

What is a non-compete agreement?

A non-compete agreement is a contract between an employer and employee in which the employee agrees not to enter into competition with his or her employer after leaving employment. This means that an employee cannot start a competing business or work for another employer who is in direct competition with his former company.

In many cases, non-compete agreements are just about protecting valuable trade secrets. Non-competition agreements typically include confidentiality clauses that protect the company’s intellectual property and other sensitive information during employment and after employment. Also, an employer will typically include non-solicitation clauses to prevent their employees from luring away customers or discouraging former clients from doing business with the company after they leave employment.

When are non-compete agreements not enforceable?

There are several situations where non-competes are non-enforceable. One of them is if the non-compete clause is too broad and it’s unclear what exactly an employee can or cannot do. Another instance is if the employee did not sign the non-compete agreement (voluntarily). If the contract violates public interest, the employee in question can challenge it. For instance, non-compete agreements cannot prevent an employee from, say, reporting illegal activities to the proper authorities.

How long does a non-compete agreement last?

Typically, non-competes will last for six months or longer. However, non-competition agreements can range in length due to the fact that an employer may need to customize theirs to fit their unique needs. Just remember that non-competes should be reasonable and limited in scope.

Non-competition agreements are not necessarily bad, but they can severely limit you if you aren’t careful. It’s always wise to make sure that the agreement is reasonable and understand when it is enforceable and non-enforceable.