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New York and New Jersey Non-Compete Law Firm

NY and NJ Non-Compete Law Firm

In New York and New Jersey, Mr. Internicola, Esq. represents individuals and businesses in litigation involving non-compete agreements and covenants. Non-Compete agreements are enforceable, but do require scrutiny and, depending on your position (i.e., as the party attempting to enforce or the party defending against), require a carefully planned litigation strategy.

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When evaluating your "non-compete" and the right litigation strategy and game plan, start off with an assessment of your contractual rights and the circumstances that gave rise to the non-compete. Below are some points that you must be aware of when working with your non-compete litigation attorney.

What Is The Reason For Your Non-Compete?

To start this analysis, there are some initial factors that must be considered and evaluated, starting with the reason why you signed a non-competition agreement. Typically, non-competition agreements and the threat of enforcement and litigation relates to either:

  • An employment relationship whereby you signed a "non-competition" covenant in the course of your employment;
  • A business ownership relationship whereby, pursuant to the terms of your shareholder agreement, partnership agreement or member operating agreement, you are subject to restrictive covenants;
  • A business transfer or sale whereby, as the selling party, you agreed to post-closing restrictive covenants; or
  • Expiration of a franchise agreement that triggers post-termination restrictive covenants against you, as a franchisee.

In the States of New Jersey and New York, "non-competition" agreements are heavily scrutinized and enforceability varies depending how the non-compete was drafted and your particular circumstances. The following is a brief summary of some information that you should be aware of:

Non-Competes and Employment Relationships
  • Non-Competes and Employment Relationships - (Lower Enforceability) In the states of New Jersey and New York, non-competition covenants and obligations created as a result of an "employer - employee" relationship face extreme scrutiny. Within this employer relationship, a distinction must be made between "contract employees" and "at-will" employees.
  • At-Will Employees - At-will employees are employees who possess no contractual rights to continued employment. That is, there is no agreement that prohibits your employer for terminating you "at-will" for no reason at all. This compares to a "contract employee" who is guaranteed a specific employment term period whereby he or she cannot be terminated unless the employer establishes a breach of the employment agreement. If you are an "at-will" employee, chances are that you probably signed a simple non-compete acknowledgment and you should be aware and know that most New Jersey courts (depending on the facts, of course) will not enforce the non-competition terms. That is, a court will not stop you from working.
  • Contract Employees - If you are a contract employee - unlike at-will employees - you will have some type of agreement that guarantees you employment (including compensation) over a designated period of time. Now, New Jersey Courts are more likely to enforce non-compete agreements against "contract" employees as compared to "at-will" employees. Nevertheless, however, your non-compete will come under significant scrutiny and, if you approach your defense properly, you will have a good chance of defeating enforceability against you.
Partnership and Shareholder Relationships

Partnership and Shareholder Relationships

(Moderate Enforceability) - In connection with the relationship between shareholders and partners in closely-held companies, it is important to understand that you may be subject to and your partners may be subject to "contractual" and "equitable" non-competition covenants. Contractual restrictions will be those specifically stated in your shareholder and partnership agreement, i.e., "you cannot compete while you are a shareholder…" "Equitable" non-competition covenants are created and imposed by law. That is, in many instances as a partner and shareholder you will owe a "fiduciary duty of loyalty" that may prohibit you from competing.​ Courts are more likely to enforce, or at least consider, non-competition covenants and obligations in "partnership" settings.​​

Business Transfers and Sales

Business Transfers and Sales

(High Enforceability) - Many asset sale and stock sale agreements - related to the transfer and sale of a business - include post-closing non-competition covenants and obligations. These obligations and covenants, although not guaranteed, are likely to be enforced by a New Jersey Court.

Franchise Agreement Expiration

Franchise Agreement Expiration

(High Enforceability) - Upon expiration of your franchise agreement, more likely than not, you will be prohibited from competing within the same industry as your former franchise. Courts will be more likely to enforce these covenants.

Conclusion and One Final Note

Before you evaluate the enforceability of a non-competition agreement, you must evaluate and discuss with your lawyer the factual and legal circumstances that gave rise to the agreement. If you are being sued for breach of a non-competition covenant or if an "order to show cause" has been filed against you for temporary restraints and a preliminary injunction, it is critical for you to understand that you may have significant defenses and may be able to defeat the non-competition obligation. If you are the person trying to protect your business and enforce a non-competition agreement, you must be careful in structuring the right type of lawsuit.

Learn More

To learn more about Mr. Internicola's litigation representation, how he assists businesses in enforcing non-competes and how he assists business professionals in defending against them, contact Mr. Internicola's staff at 800.976.4904.

Charles Internicola

by Charles Internicola
National Business and Franchise Lawyer

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