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Updated July 28, 2022

A New Jersey non-compete agreement is legally enforceable to restrict a former employee from working in the same field for a duration and geographical area. An employer may enter into a non-compete to protect its business’s “legitimate interests.” This includes the employer’s customer relationships, trade secrets, and confidential business information.

Legally Enforceable?

Yes , a non-compete in New Jersey is legally enforceable if it follows the “Solari/Whitmyer” test :

1. Simply protects the legitimate interests of the employer;
2. Imposes no undue hardship on the employee; and
3. Is not injurious to the public.

Source: Solari Industries, Inc. v. Malady (1970) & Whitmyer Bros., Inc. v. Doyle (1971)

Psychologists (exempt)

A licensed psychologist is exempt from entering any agreement that prohibits clients from being able to see their preferred therapist of choice.

Source: § 13:42-10.16

Attorneys (exempt)

A licensed attorney cannot participate in offering or making an agreement that restricts their right to practice law after employment termination.

Source: RPC 5.6

Legitimate Interest

A “ legitimate interest ” can be described as:

  • Customer relationships;
  • Trade secrets; and
  • Confidential business information.

Source: Coskey’s TV & Radio Sales v. Foti (1992)

Customer Relationships

For customer relationships, there must be evidence that “a significant investment of time, effort and money which is worthy of protection.” ( A.T. Hudson & Co., Inc. v. Donovan (1987) )

However, the New Jersey Superior Court has recently limited the protectable employer’s customers to those only an employee had direct contact with , not all the employer’s customers. ( ADP, LLC v. Kusins (2019)

Continued Employment

If an employee is offered continued employment, it will be validated as sufficient consideration for a non-compete.

Source: Hogan v. Bergen Brunswig Corp. (1977)

Maximum Term

3 years has been found legitimate if the geographical area for the non-compete is limited to the city/town where the employer is located.

Source: Fullerton Lumber Co. v. Torborg (1955)

Blue Penciling

Blue penciling is allowed and lets a court modify and enforce a non-compete to the extent reasonable under the law.

Definition

The term “ blue pencil[ing] ” refers to a court’s modification or tailoring of a restrictive covenant.

Source: ADP, LLC v. Kusins (2019)