Covenant Not to Compete Lawyer in Philadelphia & South Jersey
Today, many employers in competitive industries may ask new employees to enter into a covenant not to compete. However, when an employee chooses to quit and seek new employment, there can be issues that arise as a result of the terms of the contract. At Cronin Trial Lawyers, our experienced business lawyers have proven their success in covenant not to compete disputes.
What is a covenant not to compete?
A covenant not to compete is a clause in a contract, typically an employment contract, in which the signing party agrees not to begin a new job that is too similar to the one that they are about to start.
For example: Let’s say that Allen is joining a technology company in NJ. The technology company requires him to sign a covenant not to compete before he can begin working. The contract prevents him from starting his own technology company in Camden County for a period of one year.
Why would an employer have a covenant not to compete clause?
Not every company chooses to add this type of clause to their employment contract, but for companies in certain situations, it is beneficial to have their new hires sign such an agreement. Businesses that deal with highly confidential materials or allow employees to have open access to client databases often use a covenant not to compete clause. Another reason that a company might want to have employees sign a covenant not to compete is that they hold trade secrets, trademarks or copyrights.
What type of restrictions might a covenant not to compete include?
A covenant not to compete can limit the type of business in which a former company employee can work for. It can be in place only for a limited period of time; one year is a common time frame. The clause should also specify a certain geographic location.
To return to our earlier example, when Allen signs on with the NJ technology company, a covenant not to compete might limit his ability to work for a similar type of company in the Camden County area for a period of one year.
What are the limitations of a covenant not to compete clause?
While this type of covenant is in place to protect the business interests of the company, it cannot entirely limit an employee’s ability to find new work. The agreement needs to be very specific in terms of the timeframe, geographical area and type of business.
For example, a covenant not to compete that asked Allen not to work for any technology companies in a 1,000-mile radius for a period of five years would probably be seen as too broad to be reasonably protecting the company’s businesses interests, and it would likely not be upheld in court.
If you find yourself in a covenant not to compete dispute, call Cronin Trial Lawyers to get your case resolved quickly. Our commercial litigation lawyers vow to do their utmost on behalf of their clients. For a free consultation, call us today or fill out the contact form on our website.