After an extensive job search, you are offered a position with a large corporation. Before accepting, you are presented with an employment agreement including a non-compete clause, a non-solicitation clause, and a non-disclosure clause. You are required to sign these documents as a condition of employment. Feeling you have no real choice, you sign the documents.
Life goes on. You’ve been working for the same company for three years when you are offered a better position with a higher salary in the same field in the same state as your current job. You then remember all those documents you signed. What now? Did you sign away your right to change jobs?
Non-compete, non-solicitation, and non-disclosure clauses
Non-compete agreements typically offer employment on the condition that the employee, while employed for that employer, and for a specified time following employment, shall not work for or start a business that competes with the employer, in the same geographic area. The geographic area is usually defined in the non-compete clause.
Non-solicitation agreements specify that the employee shall not solicit former coworkers to a new place of employment or business.
Non-disclosure agreements typically require the employee to agree not to disclose trade secrets or other confidential or proprietary information gained during employment that could harm the business interests of the employer. Many non-disclosure clauses go even further, prohibiting an employee from saying anything that casts the employer or the business in a negative light and restricting an employee’s ability to use knowledge gained during his or her employment for a different employer.
These agreements should strike a balance between an employee’s right to change jobs and an employer’s right to protect its business. However, that balance can tilt too far toward protecting the employer. You should give careful consideration before signing a document that may affect your freedom to change jobs, to continue working in the same field, or to start your own business.
Are non-compete, non-solicitation, and non-disclosure agreements enforceable?
In Pennsylvania, non-compete, non-solicitation, and non-disclosure agreements are enforceable if the agreements:
• are ancillary to an employment relationship;
• are supported by adequate consideration;
• impose restrictions that are reasonably necessary for the protection of the employer’s legitimate business interests; and
• the scope of the restrictions imposed are reasonably limited in duration and geographic location.
In New Jersey, non-compete, non-solicitation, and non-disclosure agreements are enforceable if the agreements:
• are reasonable under the circumstances;
• are reasonable in duration and geographic scope;
• protect a legitimate interest of the employer’s business
• do not cause undue hardship on the employee; and
• are not against the public interest.
The terms of non-compete, non-solicitation, and non-disclosure agreements cannot be so restrictive as to unreasonably interfere with the employee’s ability to work.
Valid and enforceable non-compete, non-solicitation, and non-disclosure agreements are binding contracts that determine the terms and conditions of current employment and may affect future employment. Signing these agreements may place conditions on your freedom to change jobs.
If you breach a non-disclosure agreement, non-compete, or non-solicitation agreement, an employer may sue you for money damages and request a preliminary injunction. If granted, a preliminary injunction can interfere with your new employment or business by preventing you from working or conducting business in violation of the agreement with your former employer.
You should carefully read these agreements before signing – and consider reviewing the documents with an experienced employment attorney prior to signing them.
If you have already signed a non-compete or other agreement, and have been offered another job, you should review the terms with an experienced employment attorney. The Murphy Law Group will review the agreements to determine if they appear to be valid and enforceable in whole or in part, explain your rights and obligations, and answer your questions. Email us at firstname.lastname@example.org or call (267) 273-1054 for a free consultation.