Employee Restrictive Covenant Agreement
Cover Terms
The terms below are incorporated into and form part of this agreement.
| Employer | [Legal name of the entity that employs the employee] | ||||||||
| Employee | [Full legal name of the employee] | ||||||||
| Employee Title / Position | |||||||||
| Effective Date | [Effective date of this agreement — the date the last party signs. It anchors the duration presumptions stated in Cover Terms.] | ||||||||
| Governing Law | New Jersey | ||||||||
| Confidentiality | |||||||||
| Trade Secrets Duration | Perpetual | ||||||||
| Other Confidential Information Duration | 24 months | ||||||||
| Employee Non-Solicitation | |||||||||
| Duration | 24 monthsMarket benchmark HideShow
Why this selected default?Why is this the selected default?24 months matches the modal employee non-solicit term observed in benchmarked, publicly-filed employee agreements; 12 months is the common lighter alternative. The Act sets no express duration presumption for the no-hire category, so the uniquely-essential scope limit does the primary category work; counsel should size the term to the workforce interest actually protected. Showing 3 representative examples. Company names link directly to the underlying SEC filing.
Showing 3 representative examples. Company names link directly to the underlying SEC filing.
Showing 3 representative examples. Company names link directly to the underlying SEC filing.
Showing 3 representative examples. Company names link directly to the underlying SEC filing. See all 3 examples in the complete benchmark →Showing 1 representative example. Company names link directly to the underlying SEC filing. See all 1 example in the complete benchmark →Showing 1 representative example. Company names link directly to the underlying SEC filing. See all 1 example in the complete benchmark →Showing 1 representative example. Company names link directly to the underlying SEC filing. See all 1 example in the complete benchmark →Showing 1 representative example. Company names link directly to the underlying SEC filing. See all 1 example in the complete benchmark →Showing 1 representative example. Company names link directly to the underlying SEC filing. See all 1 example in the complete benchmark → | ||||||||
| Customer Non-Solicitation | |||||||||
| Duration | 12 monthsState-law basis 12 monthsReference only — not part of this agreement. 12 months sits well inside the presumptively reasonable window for a current-customer non-solicit: eighteen months, or for as long as post-separation consideration is paid, whichever is greater. Counsel may extend toward eighteen months, or longer while post-separation consideration is paid, where the interest supports it. | ||||||||
| No Business with Covered Customers | |||||||||
| Duration | 12 monthsState-law basis 12 monthsReference only — not part of this agreement. 12 months sits within the current-customer window. Because non-dealing has no category of its own, it is drawn to fit inside the current-customer non-solicit exception, and its duration tracks that category's presumption. | ||||||||
| Non-Investment | |||||||||
| Duration | 12 months | ||||||||
| Non-Disparagement | |||||||||
| Duration | 24 months |
Standard Terms
1. Defined Terms
“Competitive Business” means the business activities described in Cover Terms under Competitive Business.
“Confidential Information” means non-public information relating to Employer's business, including trade secrets, customer lists, pricing, business processes, technical data, and strategic plans, but excluding information that becomes public through no fault of Employee and the general knowledge, skill, and experience Employee acquired during employment.
“Covered Customers” means customers, vendors, referral sources, and business partners with whom Employee had material contact or for whom Employee had responsibility during the 12 months before termination of employment.
“Covered Employees” means employees with whom Employee worked or whom Employee managed during the 12 months before termination of employment.
“Passive Public Holdings” means ownership of securities of a publicly traded company representing less than five percent of any class of such company's securities, and interests in diversified mutual funds, index funds, and exchange-traded funds that may hold securities of a Competitive Business.
“Protected Interests” means Employer's Trade Secrets, Confidential Information, and customer relationships.
“Restricted Period” means the duration specified in Cover Terms for each covenant, beginning on the date Employee's employment with Employer ends for any reason.
“Restricted Territory” means the geographic area described in Cover Terms under Restricted Territory.
“Solicit” means to directly or indirectly contact, approach, induce, encourage, or provide Confidential Information to any person or entity for the purpose of diverting business away from Employer, but does not include responding to general advertisements or unsolicited inquiries not initiated by Employee.
“Trade Secrets” means information qualifying as a trade secret under applicable law.
2. Recitals and Legitimate Interests
Employer and Employee acknowledge that each restrictive covenant in this agreement protects one or more of Employer's Protected Interests, including Employer's trade secrets, confidential business information, and customer relationships. The parties acknowledge that Employer would not provide Employee with access to these Protected Interests absent the protections in this agreement. Employer and Employee acknowledge that the covenants are reasonable in time, territory, and scope.
Drafting Note The reasonableness gate
New Jersey has no general non-compete statute for the ordinary workforce, so every post-employment covenant in the agreement stands or falls on the common-law three-part reasonableness test: a restraint is given effect only where it protects a legitimate employer interest, imposes no undue hardship on the employee, and is not injurious to the public . The recognized legitimate interests are a narrow set — trade secrets, confidential business information, and customer relationships — so a covenant reaching beyond them to suppress ordinary competition or the employee's general skill and knowledge protects nothing the doctrine recognizes, and a court weighs each covenant's reasonableness prong by prong before enforcing it . Adequate consideration establishes only that a covenant is supported, not that it is reasonable, so each covenant clears the test on its own footing; a restraint confined to identified competitors is stronger evidence that it protects a genuine interest than one drawn against competition at large, and the test travels with the instrument — an assignee enforcing the covenant must still show a legitimate interest, no undue hardship, and no public injury on the facts as they then stand. A covenant tied to the sale of a business is measured more leniently as protection of the goodwill sold, so a restraint borrowed from that setting is measured against a standard it was never sized to .
Drafting Note Reasonableness
New Jersey's employer-friendly consideration rule does not excuse an unreasonable restraint. Continued employment can supply the consideration that supports the covenant, but consideration establishes only that the covenant is supported, not that it is reasonable — the restraint itself still stands or falls on the Solari/Whitmyer test of duration, territory, and scope, so a covenant adequately supported yet overbroad on any of those dimensions fails on reasonableness .
Drafting Note Protectable interests
A New Jersey covenant that blocks competition disconnected from a protectable interest protects nothing the doctrine recognizes. The recognized legitimate interests are a narrow set — trade secrets, confidential information, and customer relationships — so a restraint reaching beyond them to suppress ordinary competition or an employee's general skill and knowledge is exposed on the legitimate-interest prong, while trade-secret protection has its own home in a confidentiality and Trade Secrets Act remedy that runs alongside the covenant rather than inside it .
3. Timing, Consideration, and Employee Acknowledgements
The parties acknowledge that this agreement is supported by adequate consideration. If Employee is an existing employee, the consideration is the continuation of Employee's employment. If this agreement is signed at the outset of employment, the consideration is the offer and commencement of employment. Employee acknowledges having had the opportunity to consult with independent legal counsel before signing this agreement. This agreement is effective as of the Effective Date listed in Cover Terms.
4. Confidential Information and Trade Secret Protection
Employee must treat all Confidential Information as strictly confidential. Employee must not use or disclose Confidential Information except as required to perform authorized job duties or with Employer's prior written consent. Employee's obligations regarding trade secrets continue in perpetuity, for as long as the information remains a trade secret. Employee's obligations regarding other Confidential Information continue for the period specified in Cover Terms. This confidentiality obligation is intended to operate alongside, and independent of, any restrictive covenant, and does not restrict Employee's use of the general knowledge, skill, and experience Employee acquired during employment.
5. Permitted Disclosures and Protected Conduct
Nothing in this agreement prohibits Employee from: (a) reporting possible violations of law to any government agency, including the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, or any other federal, state, or local agency; (b) making disclosures protected under whistleblower provisions of any law; (c) discussing wages, hours, or other terms and conditions of employment as protected by applicable law, including Section 7 of the National Labor Relations Act (29 U.S.C. § 157); (d) testifying truthfully in legal proceedings; or (e) filing a sealed complaint in court using Confidential Information without liability. Pursuant to the Defend Trade Secrets Act (18 U.S.C. § 1833(b)), Employee may not be held criminally or civilly liable for disclosing a trade secret in confidence to a government official or attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a sealed court filing.
6. Return, Deletion, and Certification of Company Property
Upon termination of employment, Employee must promptly return to Employer all documents, devices, files, credentials, and other materials containing or relating to Confidential Information. Where permitted, Employee must permanently delete electronic copies of Confidential Information from personal devices and accounts. Employee must certify compliance with this section in writing upon Employer's request.
7. Non-Solicitation of Employees
During the Restricted Period, Employee must not Solicit, recruit, hire, or attempt to hire any Covered Employee. This restriction does not prohibit Employee from providing a professional reference upon request or from hiring a person who responds to a general advertisement not directed specifically at Employer's employees. This covenant reaches only Covered Employees during the Restricted Period and is no broader than necessary to protect Employer's workforce stability and customer relationships.
8. Non-Solicitation of Customers, Vendors, Referral Sources, and Business Partners
During the Restricted Period, Employee must not Solicit the business of any Covered Customer. This covenant reaches only Covered Customers with whom Employee had material contact and is no broader than necessary to protect Employer's customer relationships.
Drafting Note Customer non-solicitation
A customer non-solicit that reaches every client regardless of the employee's contact with them is overbroad on its face. New Jersey courts blue-pencil overbroad non-solicitation clauses, so a covenant confined to customers the employee actually served or learned about survives as drawn, while a broader one is narrowed by the court to whatever reasonably protects the employer's interest .
Drafting Note Tiered solicitation restraints
The solicitation restraints hold when they track relationships the employee actually had. Tiered restrictive covenants built around real customer and coworker relationships have been upheld as furthering legitimate business interests and complying with New Jersey public policy, and an overbroad one is blue-penciled to a reasonable scope rather than discarded . A customer non-solicit reaching only Covered Customers the employee had material contact with maps directly onto the customer-relationship interest and, backstopped by the confidentiality and Trade Secrets Act protections, is often a stronger and more readily enforceable restraint than a broad non-compete. The employee non-solicit is the lightest restraint in the family and holds where it reaches only Covered Employees through the look-back window; a no-business-with-covered-customers covenant presses hardest on the undue-hardship and public-interest prongs because it reaches unsolicited business, so it survives only where it is sized tightly to those same relationships.
9. No Business with Covered Customers
During the Restricted Period, Employee must not accept, service, or do business with any Covered Customer with whom Employee had material contact, whether Employee or the Covered Customer initiates contact.
10. Non-Investment
During the Restricted Period, Employee must not acquire or hold any active ownership interest in, serve as a director, officer, manager, or advisor to, or have material economic participation in any Competitive Business. Passive Public Holdings are permitted.
11. Non-Disparagement
During the Restricted Period specified in Cover Terms for Non-Disparagement, Employee must not make statements that are intended to or reasonably likely to disparage Employer, its officers, directors, employees, products, or services. This section does not restrict Employee from making truthful statements in legal proceedings, providing truthful testimony, making disclosures to government agencies, exercising rights protected by law, or disclosing details relating to a claim of discrimination, retaliation, or harassment.
12. Discrimination, Retaliation, and Harassment Claims Not Concealed
This section does not limit any covenant not to compete or obligation not to disclose proprietary information.
Drafting Note Claim confidentiality
A confidentiality or non-disparagement clause that would conceal the details of a discrimination, retaliation, or harassment claim is unenforceable in New Jersey, and a party that tries to enforce it is exposed to the employee's attorney fees and costs. The bar turns on the provision's purpose or effect rather than its label, so a concealment clause dressed as ordinary confidentiality falls the same way .
Drafting Note The discrimination-claim concealment bar
A confidentiality or non-disparagement term that would conceal the details of a discrimination, retaliation, or harassment claim is unenforceable against the employee, and the label on the clause does not control . The exposure runs one way: a party that enforces or attempts to enforce a barred concealment provision is liable for the employee's reasonable attorney fees and costs, so any fee-shifting in the agreement is read against that asymmetry . The bar is surgical rather than a threat to the covenant suite — the same statute expressly preserves an agreement not to compete and not to disclose proprietary information, so only the claim-details concealment is excluded and the covenants remain intact .
13. No Practice Restrictions for Lawyers
If Employee is a lawyer, no provision of this agreement restricts Employee's right to practice law after the relationship ends, apart from an agreement concerning benefits upon retirement.
Drafting Note The attorney practice-restriction bar
A covenant that restrains a lawyer's practice after the relationship ends is void, apart from an agreement concerning retirement benefits. RPC 5.6 bars a lawyer from participating in a partnership or employment agreement that restricts post-termination practice rights , and that bar reaches indirect financial disincentives — such as compensation forfeitures aimed at a departing lawyer who keeps serving firm clients — not just outright bans, so a clause dressed as a forfeiture rather than a prohibition still falls as against public policy . The bar reaches in-house and corporate counsel practicing in New Jersey whether or not admitted in the State, so an employer cannot bind its in-house lawyers with a restraint RPC 5.6 would forbid for outside counsel .
14. No Client-Access Restrictions for Psychologists
If Employee is a licensed psychologist, no provision of this agreement interferes with or restricts a client's ability to see or continue to see the therapist of the client's choice.
Drafting Note The psychologist client-access bar
A covenant that would keep a client from continuing with a chosen psychologist is void to that extent, independent of how its time and territory read. N.J.A.C. 13:42-10.16 forbids a licensed psychologist from entering any business agreement that interferes with or restricts a client's ability to see the therapist of choice , and the uniquely personal patient-psychologist relationship forbids restraints that interrupt an ongoing course of treatment . The rule shifts the focus from the psychologist's rights to the patient's, so a covenant whose duration and territory look reasonable still fails to the extent it cuts a client off from the treating psychologist .
15. Physician and Health Care Practitioner Covenants
If Employee is a physician, no covenant prohibits Employee from continuing care for an existing patient or complying with applicable patient-notification and access requirements.
Drafting Note Physician covenant public-interest scrutiny
A covenant restraining a physician from practicing medicine is not measured as an ordinary commercial restraint. Physician covenants are not per se void, but the public-interest prong carries the analysis: the New Jersey Supreme Court applied the three-part test to a physician covenant and reduced its geographic reach so enforcement would not impair the public's access to care, rather than voiding it , and the trial court must find that the covenant protects a legitimate interest, imposes no undue hardship, and is not adverse to the public interest . A physician covenant drawn to a narrow radius and a short term, tied to preserving patient access and continuity of care, is the one that survives that heightened scrutiny; a broader one is exposed to being narrowed or defeated on the public-interest prong regardless of how its duration and territory read in isolation. No enacted New Jersey statute bans health-care non-competes, so this scrutiny, not a categorical prohibition, is what a physician covenant is measured against.
16. No Conflicting Obligations
Employee represents that performing duties for Employer and complying with this agreement does not conflict with any prior agreement, court order, or legal obligation binding on Employee. Employee must promptly disclose to Employer any potential conflict that arises during employment.
17. Notice to Future Employers and Other Third Parties
Employer may disclose the existence and terms of this agreement to any prospective employer or business associate of Employee if Employer has a reasonable belief that Employee may breach this agreement. Employee consents to this disclosure. Any such disclosure is kept factual and tied to the covenant's actual terms.
18. Tolling During Breach
If Employee breaches any restrictive covenant in this agreement, the Restricted Period for that covenant is extended by one day for each day of the breach, up to the original Restricted Period.
Drafting Note Tolling
A tolling clause that runs only while the former employee is actually violating the covenant, as determined by a court, is the one New Jersey enforces. Tolling tied to a real breach is given effect, but restrictive covenants are not favored and gratuitous extension is disfavored, so an automatic, indefinite extension is exposed to being found unreasonable .
19. Remedies
Employee acknowledges that a breach of this agreement may cause Employer irreparable harm for which money damages would be inadequate. Employer may seek injunctive or other equitable relief in addition to any other remedies available at law.
20. Enforceability and Severability
If any provision of this agreement is found to be unenforceable, the remaining provisions remain in full force and effect.
21. Survival and Expiration of Each Covenant
Each restrictive covenant in this agreement survives the termination of Employee's employment for the Restricted Period specified in Cover Terms. Obligations under the Confidential Information and Trade Secret Protection section survive for the Trade Secrets Duration specified in Cover Terms to the extent they relate to trade secrets, and for the Other Confidential Information Duration specified in Cover Terms for other Confidential Information. All other provisions survive to the extent necessary to enforce rights that arose during employment.
22. Assignment and Successors
Employee may not assign this agreement or any rights or obligations under it. Employer may assign this agreement to any affiliate, successor, or acquirer of all or substantially all of Employer's business or assets. This agreement is binding on and inures to the benefit of the parties and their respective heirs, successors, and permitted assigns.
23. Governing Law, Venue, and Dispute Process
This agreement is governed by the law listed in Cover Terms. Disputes will be resolved in the courts of the Governing Law state, subject to non-waivable rights under applicable law. The parties intend that the governing-law and venue choices match where Employee actually lives and works.
24. Entire Agreement, Amendment, Waiver, and Electronic Signatures
This agreement constitutes the entire agreement between the parties regarding its subject matter and supersedes all prior agreements, understandings, and negotiations on this subject. This agreement may be amended only in writing signed by both parties. A party's failure to enforce any provision does not waive that party's right to enforce it later. This agreement may be executed in counterparts, including by electronic signature, each of which is an original.
Signatures
By signing this agreement, each party acknowledges and agrees to the restrictive covenant obligations above. Employee confirms having read and understood each provision, including the Cover Terms.
Employer
Employer: [Legal name of the entity that employs the employee]
Signature:
Signatory Name: [Full name of the authorized signatory signing for the employer]
Title: [Title of the authorized signatory signing for the employer]
Date:
Employee
Signature:
Print Name: [Full legal name of the employee]
Date: