It is perhaps an understatement to say that we live in turbulent times. Since the pandemic, many of the fundamental assumptions about how we work have changed to accommodate the strong public need to work from home. There has also been a significant push for better employment conditions, which has led to increased employee bargaining power. These events have led to a substantial increase in how many people perform services from home and online alongside a massive shift of employees finding better employment elsewhere. This shift has led to a question we have been hearing more and more: how does my non-compete clause with my current employer affect my ability to take a telework position with another employer?
What is a Non-Compete Agreement
Non-compete agreements (“NCAs”) are contractual devices used by employers to restrict their employees’ ability to obtain similar employment elsewhere. NCAs are historically disfavored because, as our courts have noted, it is generally a positive thing for people to be able to obtain gainful employment. However, New Jersey courts also recognize that employers have a legitimate business interest in protecting their good will and intellectual property. Accordingly, to be enforceable an NCA may only restrict future employment that is similar in nature to the employer’s line of business. Also, NCAs must be “reasonable” in scope.
New Jersey courts look to three factors to determine what is “reasonable.” First, the court must determine if the NCA is reasonable in length. While a term of one or two years is generally acceptable, fifty years would not be. Second, the court must determine if the NCA is reasonable in terms of its geographic area. While restricting employment within a ten-mile radius is generally acceptable, restricting employment within the entirety of the East Coast is less likely to be. Finally, the court must determine if enforcement of the NCA is against the public interest. For example, if the NCA would prevent a neurosurgeon from obtaining employment in a large area serviced by only one other neurosurgeon, it is less likely to be considered reasonable.
So, how do we apply those factors to an employment arrangement where the former employee can work from anywhere and service clients who themselves may be located anywhere?
Applying NCAs to Telework
Many in the healthcare industry have found telework to be a much better way to provide healthcare services. However, with innovation comes many, many legal questions. One such question is to what extent does an NCA restrict a healthcare worker’s ability to perform telehealth services. Notably, most existing NCAs do not address telemedicine visits.
One of the primary issues is how to apply the geographic limitations in an NCA to telework. Telemedicine, by definition, allows physicians regardless of their location to visit with patients all over the country. So, does the NCA’s geographic limitation apply to the practitioner’s location, the patient’s location, neither, or both?
This is not a question that has been decided in New Jersey, and both our courts and the healthcare industry is adjusting. Currently, our courts still look to find a balance between the competing interests of employers, patients, and practitioners, all while taking care to consider the public good. The public good, of course, is all the more pressing as the country continues to deal with the ever-evolving pandemic.
It is always advisable to have an attorney review your employment contracts, especially if a NCA is involved, to make sure you aren’t giving up any of your rights to work as you choose.
The experienced litigators at Attorneys Hartman, Chartered can review your NCA and work with you if it is limiting your employment opportunities. Our employment lawyers represent clients in Burlington County, Camden County, and all across New Jersey in their cases related to NCAs.
Our main office is located at 68 East Main Street, Moorestown, New Jersey 08057.