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Ely
Ely, Counselor at Law
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Experience:  Private practice with focus on family, criminal, PI, consumer protection, and business consultation.
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Regarding a Non-Compete Agreement in the State of Texas. I

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Regarding a Non-Compete Agreement in the State of Texas.
I currently work for a major car rental provider as a Corporate Account Manager. My territory includes accounts that range in volume of $50K to $1M annually. The accounts larger than $1M are handled by a Global Account Manager.
I have been approached by a competitor regarding a position in the National Accounts area of their company and responsibilities would be in the $1M + range and no activity in the current range I am responsible for at my present employer.
Two questions:
(1) Would a Non-Compete prohibit me from joining the new company given the differences in responsibilities? Texas is at At Will Employment State and new responsibilities would not be with any of the account base I currently handle.
(2) Current Non-Compete makes me responsible for all attorney's fees associated with enforcement of the non-compete. What is the high side of the potential financial impact?

Thank you
Rob
Submitted: 1 year ago.
Category: Legal
Expert:  Ely replied 1 year ago.
Hello friend. My name is XXXXX XXXXX welcome to JustAnswer. Please note: (1) this is general information only, not legal advice, and, (2) there may be a slight delay between your follow ups and my replies.

What does the non-compete actually state? That you would not be able to work for a competitor? Does it list ranges? What is the verbiage of the non-compete that may impact you taking a role with the new company?

It all boils down to what is stated in the contract.

This is not an answer, but an Information Request. I need this information to answer your question. Please reply, so I can answer your question. Thank you in advance.
Customer: replied 1 year ago.

Ely:


Thank you for your follow up. I should mention I joined my current company in January 2013. Headquarters for the Company are in New Jersey and I reside in Texas.


 


 


Actual language in the document states--


(1) You Agree for a period of one year following the end of your employment with the Company (whether such termination is voluntary or involuntary), you will not become employed with a competitor of the Company, solicit business from the Company's customers, or solicit business from an entity that was being solicited by the Company during that last year that you were employed by the Company.


(2) You agree that should a court issue injunctive relief to enforce any term of this Agreement, or if a court (or jury) determine that you breached any provision of this Agreement, you will reimburse the Company for all attorney's fees and costs incurred in enforcing the terms of the Agreement, and you will also be liable for any other damages or relief permitted by law.


(3) You agree that any disputes over the above terms shall be governed by New Jersey Law, shall be resolved in a New Jersey Court or in a federal Court located in New Jersey, and that the terms of this agreement may be enforced by the Company or its successors or assigns.


 


Thanking you in advance for your review and follow up.


 


Regards;


Rob

Expert:  Ely replied 1 year ago.
Thank you, Rob.

If this is governed by NJ law, then NJ law applies.

In NJ, there is not statutory law on non-competes. The Courts have developed principles based on case law, however.

Generally, New Jersey courts will only enforce restrictive covenants if they are reasonable in scope and duration.(Community Hospital Group, Inc. v. More, 869 A.2d 884 (N.J.
2005)).
.

Because New Jersey disfavors restraints on trade, restrictive covenants are narrowly construed (J.H. Renarde, Inc. v. Sims, 711 A.2d 410 (N.J. Super. Ct. Ch. Div. 1998))..

To determine if a non-compete covenant is reasonable, New
Jersey courts use a three prong test which has to have the party trying to enforce it show that:
-Is necessary to protect the parties’ legitimate interests
-Does not cause undue hardship on the former employee
- Is not against the public interest.
(Solari Indus. v. Malady, 264 A.2d 53 (N.J. 1970).)

You can see a complete breakdown here.

(1) Would a Non-Compete prohibit me from joining the new company given the differences in responsibilities? Texas is at At Will Employment State and new responsibilities would not be with any of the account base I currently handle.

Texas is an at-will employment state, but at-will discusses the fact that one may come and go as they please, or be hired/fired at will. It has nothing to do with non-competes.

So this does not apply here. What applies here is the three-prong test above, based on NJ law because this is where the law and jurisdiction lie, per the contract.

Assuming it is violated, the party violated can be sued for (1) breach of contract and (2) tortuous interference with business. However, it would then be up to the Court to decide whether or not the non-compete is enforceable based on the test above. Since every case is different, it depends on the matter at hand; one cannot "foresee" what the Court will state.

So it is whether or not the company chooses to enforce the contract, and, whether or not the court will agree that it is reasonable and thus, enforceable.

(2) Current Non-Compete makes me responsible for all attorney's fees associated with enforcement of the non-compete. What is the high side of the potential financial impact?

This can run into thousands- 5k or even 7k. That is again if they win. If not, then you would not be saddled with the legal fees.

I hope this helps and clarifies. Good luck.

Please note: I aim to give you genuine information and not necessarily to tell you only what you wish to hear. Please, rate me on the quality of my information and do not punish me for my honesty. I understand that hearing things less than optimal is not easy, and I empathize.

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Ely, Counselor at Law
Category: Legal
Satisfied Customers: 89095
Experience: Private practice with focus on family, criminal, PI, consumer protection, and business consultation.
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