Restrictive Covenants

What is a Restrictive Covenant?

Restrictive CovenantsCommon in both New York and New Jersey, restrictive covenants are agreements that limit what you can do during or after your current job. For example, they can limit where you can work, what you can say or who you can hire. They can be included in your employment contract, offer letter, employee handbook, severance agreement, or a separate document. Some of the most common forms of these restrictive covenants are described below.

Non-Compete Agreements

A non-compete agreement limits your right to work for a company that competes with your employer for a period of months or years after you leave your job. Non-compete agreements can be broad, prohibiting you from working in an entire industry for several years, or they can be narrow, limiting your ability to work for a handful of companies for a few months. But either way they can limit your ability to find a new job. Additional information is available on our non-compete agreements page.

Non-Solicitation Agreements

A non-solicitation agreement limits your right to solicit, hire or do business with employees, customers, vendors, suppliers or other companies or individuals who have a relationship with your current employer. While they can be limited in scope, at times they are written so broadly that they have the same impact as non-compete agreements. For more information please visit our non-solicitation agreements page.

Non-Disparagement Clauses

A non-disparagement clause is a provision in an agreement that requires you not to say anything negative about your employer, whether or not it is true. They frequently are included in severance agreements, but also can be part of an employment contract or other document. Since employers typically draft them, non-disparagement clauses often are unilateral, meaning they limit what you can say about your employer but do not limit what your employer can say about you.

Trade Secret Agreements

A trade secret agreement limits your right to use a trade secret or other intellectual property belonging to your employer. They also can include provisions specifying whether you or your employer are the ones who own any inventions, creations or other intellectual property you develop while you are one of its employees.

There are many restrictions on your right to use your company’s trade secrets or confidential information even without a written agreement. For more information you might be interested in reading our article: New Jersey Passes Trade Secrets Act.

Confidentiality Provisions

Many employment contracts contain confidentiality clauses that limit your right to discuss certain information. For example, they might restrict your right to use or discuss customer lists, pricing information, financial information, or other confidential and proprietary information with a competitor or others outside of your job.

The Duty of Loyalty

Although technically not a restrictive covenant, the duty of loyalty imposes limitations on what you can do while you are working for a company in New Jersey and New York. For instance, it limits your ability to compete with your current employer or to take other actions that are harmful to its business. For more information please see our duty of loyalty page.

Contact a Lawyer Regarding Your New Jersey Restrictive Covenant

If you are negotiating the language of a non-compete agreement, deciding whether you should sign a non-solicitation agreement, or making sure you are not violating a restrictive covenant you have already signed it can be very helpful to speak to an experienced attorney. Our employment law and business attorneys are experienced at representing clients regarding a wide variety of restrictive covenants. If you would like to schedule a consultation please either contact us online or call us at (973) 744-4000.