In a
groundbreaking decision, the Appellate Division of the
New Jersey Superior held on Wednesday, April 16, 2003,
that an employee fired for refusing to sign a non-compete
agreement has the right to pursue a claim of wrongful
discharge against her former employer. The Court held
that both New Jersey's Conscientious Employee Protection
Act (NJCEP) and the public policy of the State protect
employees who refuse to sign non-compete agreements
when the employer has no legitimate reason for imposing
the agreement or when the agreement is overbroad, oppressive,
or unfair. The decision is only the second such decision
by any court in the country.
The lawsuit at issue was initially filed in Mercer
County Superior Court in August, 2001 by Karol Maw against
her former employer, Advanced Clinical Communications,
Inc. (ACCI) of Lambertville, New Jersey. Ms. Maw, who
worked for ACCI as a graphic designer, is 41 years old,
a single mother of one, and lives in New Hope, Pennsylvania.
In the suit, Ms. Maw alleged that her employer terminated
her in violation of the public policy of the State of
New Jersey when it fired her on March 15, 2001 after
she refused to go along with its demand that she sign
a non-compete agreement. Ms. Maw had worked for 3 and
1/2 years as a graphic designer for ACCI, a company
that provides marketing and educational services to
the pharmaceutical and health care industries. She was
presented in January, 2001 with an Employee Agreement,
and told that if she wished to keep her job, she had
to sign. One of the terms of the Agreement was a Non-Compete
Covenant, which, for the two years after she left her
employment with ACCI, would have prohibited her from
working for any companies that had been competitors
or customers of the Company. When she refused to sign,
she was fired.
Ms. Maw's lawsuit was originally dismissed by the trial
court after hearing arguments by attorneys for both
sides. Ms. Maw then took her case up to the Appellate
Division for review.
In a 22-page, well-reasoned decision, the Appellate
Court reversed the decision of the trial court and found
that Ms. Maw should have been afforded an opportunity
to prove her case. At the outset, the Court recognized
that, non-competition agreements are looked upon unfavorably
by the courts, as potential restraints on trade. It
then went on to hold that before an employer can subject
an employee to a non-compete agreement, it must first
demonstrate that it has legitimate interests which require
protection through such an agreement. Most importantly,
the Court recognized that an employee in Ms. Maw's situation
need not sign the agreement and then wait to challenge
it until after she leaves employment or is terminated.
The Court recognized that if employees are unreasonably
forced to sign non-compete agreements, then they will
either be placed in a position of being married to the
employer for life or of ignoring the agreement they've
signed at the risk of being sued by their employer.
The Court held that, neither choice fosters New Jersey's
public policy of prohibiting restraints of trade and
encouraging competition.
Patricia Barasch, one of Ms. Maw's attorneys, stated
that, it's a great day for the employees of this State,
who will no longer be forced, under threat of termination,
to sign away their freedom to earn a living. Karol Maw
stated that she was thrilled with the victory and grateful
to have my rights vindicated.
A copy of the Court's decision is available at http://www.judiciary.state.nj.us/opinions/a3606-01.pdf.
For more information about Karol Maw's lawsuit or the
Court's decision, call Patricia Barasch or Richard Schall
at (856) 914-9200.
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