Employment restrictive covenants, also known as non-compete agreements, are commonly used by medical employers in New Jersey to protect their business interests and confidential information from being shared or used by former employees. These agreements can include a variety of clauses, such as non-competition, non-solicitation, and non-disclosure.
In New Jersey, non-compete agreements are governed by the stateâ€™s common law and are subject to a reasonableness test. This means that the agreement must be reasonable in terms of the duration of the restriction, the geographical scope, and the type of activity restricted.Â In the medical field context, there is a third variable to consider: how difficult would it be for patients to receive continuity of care if such an agreement is enforced?
For example, a non-compete agreement that prevents a former employee from working in the same industry for a period of five years may be deemed unreasonable and unenforceable. On the other hand, a non-compete agreement that prevents a former employee from working for a direct competitor hospital or medical practice within a specific geographical area for a period of one year may be considered reasonable and enforceable.
Non-solicitation agreements, which prevent a former employee from soliciting patients of the employer, are also subject to the reasonableness test in New Jersey. This means that the restriction must be reasonable in terms of the duration, geographical scope, and type of activity restricted.
Non-disclosure agreements, which prevent a former employee from disclosing confidential information of the employer, are generally more enforceable in New Jersey as they are considered necessary to protect the employerâ€™s legitimate business interests.
It is important for physicians to understand that restrictive covenants are not automatically enforceable in New Jersey and must meet the reasonableness test.
In conclusion, employment restrictive covenants, such as non-compete, non-solicitation, and non-disclosure agreements, are commonly used by medical employers in New Jersey to protect their business interests and confidential information. However, these agreements must be reasonable in terms of the duration, geographical scope, and type of activity restricted in order to be enforceable in the state.
Contact Romanowsky Law today to discuss the restrictions you are being asked to accept in your physician employment contract. [email protected]