For companies that want to protect confidential and propriety information, a recent decision from a New Jersey court makes clear that a non-compete agreement should be in writing and should define or explain what the company considers confidential information.
In Technology Dynamics v. Anwar Master, Bergen County, NJ, Law Division (August 9, 2017), two high-level employees left plaintiff’s employment to work for a competitor. The employer sued the former employees claiming that they were engaging in an unlawful scheme to steal customers and employees. The former employees disputed the claims maintaining that they were never bound by a non-compete agreement. Although a non-compete agreement can be verbal, the court noted that it is difficult to prove if the parties do not agree to the terms. Moreover, non-compete agreements that are broadly worded to claim that “any information” about a business is confidential would be considered unenforceable. In finding the former employees, the court ruled in favor of the employees and stated that there was no signed written agreement. Even if there was an enforceable agreement, there was no agreed upon definition of confidential information that the company was trying to protect.
Non-compete agreements continue to be challenged by employees who seek to change employment. They must be carefully drafted in order to be enforceable.