New Jersey Employment Lawyer Blog

New Jersey law prohibits employees from disclosing or using certain confidential information that belong to their employers. Since many companies are sensitive about having their trade secrets used by their competitors, they frequently require employees to sign confidentiality and trade secret agreements prohibiting employees from using or disclosing their confidential information. Employees should be aware that earlier this month employers gained additional protection for their trade secrets when Governor Christopher Christie signed the New Jersey Trade Secrets Act into law.

What Does The New Jersey Trade Secrets Act Prohibit?

The New Jersey Trade Secrets Act prohibits individuals from misappropriating someone else's trade secret. It defines "misappropriation" as (1) obtaining someone else's trade secret from someone who you know or have reason to know obtained it improper means; or (2) disclosing or using someone else's trade secret without their consent if you: (a) used improper means to learn it; or (b) knew or had reason to know it was obtained by improper means when you disclosed or used it; or (c) knew or had reason to know it was obtained by improper means before you materially change your position based on it. It defines a "trade secret" as information in any form that has actual or potential economic value because it is not generally known or knowable by others through a proper means, but only if the owner of the information uses reasonable efforts to keep it secret.

What Damages Are Available Under the New Jersey Trade Secrets Act?

The New Jersey Trade Secrets Act allows someone who had its trade secrets misappropriated to recover any actual damages it suffered, plus any money the person misappropriating the trade secret unjustly earned as a result. Alternatively, a company can recover the amount of a reasonable royalty from the person who misappropriated its trade secret. In addition, the Act permits a court to issue an injunction preventing an actual or threatened misappropriation of a trade secret. It also allows a court to award punitive damages if the misappropriation was willful and malicious. However, the punitive damages cannot be more than twice the actual damages award. Moreover, under limited circumstances a court also has the right to require the losing party to pay the winning party's reasonable attorneys' fees and costs.

How Quickly Does Someone Have to Bring a Claim Under the New Jersey Trade Secrets Act?

For most situations, the New Jersey Trade Secrets Act has a three year statute of limitations. That means an employer cannot bring a claim under the Act if it waited more than three years after it either knew about the misappropriation, or would have known about it if it had exercised reasonable diligence. However, the Act indicates that a continuing misappropriation constitutes a single claim, which means that the three year statute of limitations does not begin to run until the misappropriation stops. Perhaps more importantly, even if the New Jersey Trades Secrets Act does not apply, other legal obligations, including any provisions in your employment contract, still might apply.

When Does the New Jersey Trade Secrets Act Go Into Effect?

The New Jersey Trade Secrets Act is a version of the Uniform Trade Secrets Act. It has been adopted by most states, but has not been adopted in New York. The New Jersey version went into effect immediately, but does not apply to misappropriations that occurred before January 9, 2012, including ongoing misappropriations that began prior to January 9.

What Can I Do if My Employer Claims I Misappropriated a Trade Secret?

It can be a very serious matter if your current or former employer claims you misappropriated one of its trade secrets. Contact an experienced employment law attorney who can help defend your legal rights.

Yesterday, a unanimous United States Supreme Court ruled that ministerial employees of religious groups cannot bring employment discrimination claims against the religious groups for which they work. It ruled that those claims would violate the Establishment and Free Exercise Clauses of the First Amendment to the United States Constitution. Hosanna-Tabor Evangelical Lutheran Church and School v. Equal Employment Opportunity Commission.

The case involved Cheryl Perich, a teacher for the Hosanna-Tabor Evangelical Lutheran Church and School. Ms. Perich took time off because she had a disability, narcolepsy. When she tried to return to work, the Church fired her. The Church specifically stated that Ms. Perich's threat to bring a discrimination lawsuit against it was one of the reasons it fired her.

Ms. Perich then filed a Charge of Discrimination with the United States Equal Opportunity Commission (EEOC). She claimed the Church had wrongfully terminated her employment, in violation of the Americans with Disabilities Act (ADA) by firing her because she has a disability, and in retaliation for her threat to bring a disability discrimination lawsuit. The EEOC eventually filed a lawsuit against the Church, alleging it fired Ms. Perich in violation of the ADA.

The Supreme Court ruled that the First Amendment requires a ministerial exception to federal and state anti-discrimination laws. Specifically, it held that "requiring a church to accept or retain an unwanted minister, or punishing a church for failing to do so . . . interferes with the internal governance of the church, depriving the church of control over the selection of those who will personify its beliefs." It concluded this would violate the First Amendment's Free Exercise Clause because it would be a government interference with an internal church decision that impacts the church's faith and mission. As a result, the Supreme Court ruled that Ms. Perich cannot proceed with her lawsuit.

The Court did not define who is a "minister" protected by this exception. However, it found Ms. Perich was a "minister" even though she was a teacher. It based its conclusion on facts including, among other factors, that (1) the Church commissioner her as a minister, (2) she had substantial religious training and had to pass an oral examination before she could be commissioned as a minister, (3) she held herself out as a minister and received a special housing allowance and tax benefits as a result, (4) she was assigned to perform her job "according to the Word of God," (5) her job duties required her to teach the "Word of God" and to lead her students in prayer three times a day, and (6) twice a year she lead a school-wide chapel service.

The Supreme Court noted that it was not deciding whether the ministerial exception bars other types of lawsuits against religious groups, such as lawsuits for breach of employment contracts or personal injury claims against religious employers.

Continue reading "Religious Ministers Are Not Protected by Anti-Discrimination Laws" »

Under New York law, non-compete agreements and other restrictive covenants in employment contracts are disfavored, and are enforceable only in limited circumstances. New York courts enforce non-competes only if all three of the following conditions are met:

1. The non-compete is reasonably limited in scope and duration;

2. The restrictions are no greater than necessary to protect the employer's legitimate interests;

3. The non-compete is not harmful to the general public;

4. The non-compete is not unreasonably burdensome to the employee.

Even when those four requirements are met, an employer seeking to enforce a non-compete agreement has to prove it is not merely seeking to use the non-compete agreement to prevent competition. Instead, it has to show the non-compete is necessary to protect its legitimate interests, such as to prevent the employee from using or disclosing its trade secrets or confidential information, to protect the company's goodwill, or to prevent special harm due to the unique nature of the employee's job.

There are few bright line rules regarding when a non-compete agreement is reasonable. In deciding whether a restrictive covenant is reasonable, courts consider a number of factors and balance the right of the employee to work and earn a living against the importance of the restrictions to protect the employer's business. In terms of duration, covenants not to compete for 6 months or less are generally reasonable. New York courts have approved non-competes lasting up to two years when the restrictions are otherwise reasonable and not too burdensome for the employee.

If an employee is receiving compensation from her former employer during the period when she is supposed to refrain from competition, such as severance pay or garden leave pay, the non-compete is more likely to be upheld.

Even when a non-compete agreement is reasonable, it is still unenforceable if the employer fired the employee without good cause. Likewise, a reasonable covenant not to compete is unenforceable if the employer breached the employee's employment contract.

Attorneys, as well as stock brokers and other registered representatives under Financial Industry Regulatory Authority (FINRA), should be aware that special rules apply to their non-compete agreements in New York. For example, agreements that restrict attorneys from practicing law are unenforceable, except as a condition for receiving retirement benefits. Likewise, contracts that prohibit customers from continuing to use the services of their registered representative are not enforceable.

Continue reading "Is Your Non-compete Agreement Enforceable in New York?" »