Serving New Jersey Clients Since 1977

How can I limit competition from my former employees?

It is natural to worry about your employees leaving your business and starting a new company in your area that competes against you. This is why New Jersey business owners have the option of having their workers sign a restrictive covenant.

According to the American Bar Association, a restrictive covenant is an agreement that prevents an employee from engaging in certain competitive actions. Restrictive covenants come in various types.

Non-competition covenants

Once a worker signs a non-competitive agreement, he or she cannot compete against you after leaving your employ. Though this can be the most restrictive covenant you could use, it still has limitations. A legal non-compete can only work within a certain geographic area and should only last for a limited period of time.

Covenants against soliciting other employees

You do not want a former worker to start hiring your other workers away from you. With a non-solicitation provision, your former worker cannot hire your existing employees for a specific time period. An anti-raiding provision works similarly, preventing your former workers from asking your workers to come work at a competing company.

Non-disclosure agreements

Even if your former employee does not start a new business, you still should worry about your trade secrets leaking out. Through a non-disclosure covenant, your employees cannot reveal your sensitive information or that of your clients and customers.

Keep in mind that while you could have your employees sign restrictive covenants, the agreements must be reasonable in scope. In the event your former employee finds your covenant unfair, you might end up in court where a judge could decide not to enforce your covenant.