Whitmyer Bros. v. Doyle (1971).

Legitimate Business Interest

Employers may validly protect the following with non-compete agreements:

• Trade secrets
• Confidential business information that does not necessarily meet the definition of trade secret
• Customer relationships

Ingersoll-Rand Co. v. Ciavatta (1988).

Sale of Business vs. Employment Contract

A non-compete agreement that is included as part of the sale of a business is more freely enforceable than one included in an employment contract. (Solari Indus., Inc. v. Malady (1970)).

Undue Hardship

Whether a non-compete imposes an undue hardship on an employee depends on the difficulty of finding other work in the field, and the reason the employee is no longer working for the employer. In The Cmty. Hosp. Grp., Inc. v. More (2005), the New Jersey Supreme Court held that a non-compete did not impose an undue hardship because the employee, a neurosurgeon, was in high demand, and because he voluntarily left his position.

Public Interest

In evaluating whether a non-compete agreement would harm the public, courts consider the demand for service in the field impacted by the agreement, and the effect that removing the restrained person would have. (Karlin v. Weinberg (1978))

Prohibited Professions

Lawyers may not sign employment, partnership, or similar agreements that limit the attorney’s ability to practice in the future. Rule 5.6(a), New Jersey Rules of Professional Conduct.

Lawyers cannot join case settlements that restrict their ability to represent clients in the future. Rule 5.6(b), New Jersey Rules of Professional Conduct.

Although physicians are permitted to enter non-compete agreements under limited circumstances (Karlin v. Weinberg (1978)), N.J. Admin. Code § 13:42-10.16 has been interpreted to mean that non-competes are completely prohibited among therapists and psychologists. (Comprehensive Psychology Sys., P.C. v. Prince (2005)).

Terminating an Employee

It is unclear whether a non-compete is enforceable against an employee terminated by the employer. In The Cmty. Hosp. Grp., Inc. v. More (2005), the Supreme Court of New Jersey held that non-compete agreements are not enforceable against terminated employees if enforcing them would create a hardship.

The employer has the burden of proving that a non-compete agreement is enforceable. (ADP, LLC v. Kusins (2019)).

Continued Employment (consideration)

For at-will employees, continued employment is likely sufficient consideration to enforce a non-compete agreement. In Hogan v. Bergen Brunswig Corp. (1977) held that there was adequate consideration in the case of an at-will employee who kept working for a company for three years after signing the agreement.

However, it’s unclear how long the employee must continue to work for the agreement to be enforced, and it may not be enforceable if the employee is terminated not for cause.