In most every state, a non-compete agreement must not only be reasonable, it must support a legitimate (or protectable) business interest. The rationale is that agreements that restrict competition per se are unenforceable restraints, much like anti-trust law bars certain types of business combinations or contracts.
The scope of protectable interests varies from state to state, though there is a significant level of overlap. New Jersey's test, applied on a recent motion for temporary restraining order, is employer-friendly and gives a court greater discretion to find a restraint supports a protectable interest. Like many states, New Jersey recognizes an employer has an interest in protection of confidential information and client relationships. However, its third recognized interest protects "an investment in an employee."
As should be evident, this goes beyond what other states permit. Many states, New York among them, protect unique or extraordinary skills (such as an on-air personality), while others protect specialized employee training. But just about every employer makes some "investment" in an employee. It is difficult to imagine how an employer could not satisfy the protectable interest test the way New Jersey courts have framed it.
In Ajilon Professional Staffing v. Griffin, the court had little trouble concluding at the TRO stage that an executive placement agency demonstrated a protectable interest when one of its recruiters left to join a competing firm. The court noted Griffin had worked for Ajilon for 12 years and developed a reputation in the community as a solid recruiter for financial professionals. The TRO was, therefore, extended to bar Griffin from performing a host of competitive activities under his non-compete agreement, activities which extended beyond mere solicitation of Ajilon clients.
Court: United States District Court for the District of Arizona
Opinion Date: 4/10/09
Cite: Ajilon Professional Staffing, LLC v. Griffin, 2009 U.S. Dist. LEXIS 35895 (D. Ariz. Apr. 10, 2009)
Law: New Jersey