New Jersey Lawyers BlogNew Jersey Non-Compete Agreements and Employee Duty of Loyalty Examined by Appellate Division
New Jersey law imposes certain requirements on the behavior of employees, whether through the common law or contract. New Jersey employment law and business law will enforce restrictive covenants, including non-compete agreements, if they meet certain requirements. However, the tests for enforceability are different for restrictive covenants contained in employment agreements and those which are part of
the sale of a business. Likewise, whether or not there are restrictive covenants, New Jersey employment law imposes on employees a duty of loyalty to their employers. The Appellate Division recently examined these requirements.
Background
Robert Ryerson was a registered investment advisor (RIA), providing financial planning and investment services until the National Association of Securities Dealers (NASD) found him guilty of misconduct in 2006 by sharing commissions with non-NASD members and intentionally misleading his employer. Ryerson owned and operated NCP, a small financial advisory firm. However, the NASD’s revocation of his license meant he could no longer operate NCP.
Senator Marco Rubio recently introduced the Freedom to Compete Act. This proposed law would prohibit employers from entering into or enforcing non-compete agreements with lower level employees while simultaneously protecting employers’ trade secrets.