In these turbulent economic times, both employers and employees should consider revisiting their non-competition agreements to determine the extent to which they likely are enforceable. Employers have concerns about whether agreements will operate to bind their employees to the intended restrictions and operate to preserve and protect client bases and confidential information. Employees are concerned that a change in employment, even when necessitated by conditions in the larger economy, could leave them with few real options.
New Jersey, New York, Pennsylvania, and Delaware courts look unfavorably upon non-competition agreements and, therefore, careful attention to an agreement’s terms is of paramount importance. The analysis in each of these four states is very similar and is highly fact-sensitive. A restrictive covenant such as a “non-compete clause” is enforceable only to the extent it is reasonable and is not aimed solely at stifling competition. The difficulty is the ever-nebulous definition of “reasonable.”
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