In today’s economic climate, restrictive covenants (including non-compete agreements) are becoming increasingly more common in the workplace. Indeed, it is important for employers to protect their legitimate business interests, such as pricing information, customer lists, trade secrets, marketing strategies, and other confidential and proprietary information. Likewise, employees should be mindful of potential post-employment restrictions placed in non-compete agreements since such restrictions may ultimately cost them potential job opportunities. This blog focuses on the scenario when an employer presents an employee with a non-compete agreement, and the employee refuses to sign the agreement.
In Maw v. Advanced Clinical Communications, Inc., 179 N.J. 439 (2004), the Supreme Court of New Jersey held that an employee’s termination following a dispute over the terms of a non-compete provision in her employment agreement was not a violation of a clear mandate of public policy as contemplated by the New Jersey Conscientious Employee Protection Act (“CEPA”), which prohibits, among other things, an employer from taking retaliatory action against an employee who “objects to, or refuses to participate in any activity, policy or practice which the employee reasonably believes . . . is incompatible with a clear mandate of public policy concerning public health, safety or welfare or protection of the environment.” In so doing, the Court found that a dispute over the terms of a non-compete agreement is private in nature as opposed to implicating a clear mandate of public policy. Thus, the employer’s decision to terminate the employee for refusal to sign the non-compete agreement was not retaliatory.
Therefore, the key takeaway is that, in New Jersey, it is generally lawful for an employer to terminate an employment relationship due to an employee’s refusal to sign a non-compete agreement. However, the scenario gets more complicated when out-of-state employees are at issue. In such a scenario, careful examination of the wrongful termination law for the particular state(s) at issue is required.
If you need any assistance with non-compete agreements, please contact the Law Office of Frank A. Custode, LLC.