Is That Non-Compete Agreement Enforceable?
Yes, according to the New Jersey Supreme Court in its recent decision in Maw vs Advanced Clinical Communications, Inc. The Plaintiff, Karol Maw had refused to sign a non-compete agreement which provided if she left her employment she couldn't be employed by a competitor for a period of two (2) years. She contended the provision violated public policy under the Conscientious Employee Protection Act and prevented her from finding employment in her field.
The Court followed its prior rulings in determining whether a non-compete agreement is enforceable which held an agreement is enforceable if it protects the legitimate interests of the employer, imposes no undue hardship on the employee and is not injurious to the public. The Court found non-compete agreements should not be illegal per se, but the agreement must be reasonable. If employees wished to challenge such an agreement they have private remedies and recourse to the courts but the Supreme Court refused to go the next step and declare all such agreements were contrary to public policy.
While four judges were in support of the Court's decision, two other judges dissented. They contended public policy considerations were involved being the desire to protect the consuming public from "naked restraints" on the marketplace posed by employers attempting to extinguish competition from a former employee. The minority opinion disagreed with the majority that the dispute at hand was a private matter.
It seems likely the debate over the enforceability of non-compete agreements will continue. If you or your company utilize such agreements, we would advise you to review them at this time. Reasonableness and the scope of restraints will continue to be closely reviewed by the Courts.
