On February 27, 2018, Bergen County Superior Court Judge Charles Powers held in Abuayasha v. Shapiro Spa LLC t/a The Woodhouse Day Spa, et al., that a non-compete clause that purported to prevent a fired masseuse from working as a masseuse at a nearby spa was unenforceable.
Olga Abuayasha was hired by Woodhouse Day Spa in Red Bank as a masseuse in 2012. At the time she was hired, she signed an agreement that contained a non-compete clause stating that she agreed “not to directly or indirectly compete with the business of [Woodhouse Day Spa] . . . for a period of two years following termination of employment and notwithstanding the cause or reason for termination,” within a five-mile radius of the spa.
On September 27, 2017, Abuayasha was fired by Woodhouse Day Spa for allegedly failing to produce a doctor’s note for a three-day absence from work. Abuayasha alleges she had the note but was not given a chance to produce it. Soon after, Abuayasha was hired by Dr. Sue Massie, whose spa is located within walking distance of Woodhouse Day Spa, and Massie was allegedly heard soliciting Abuayasha’s former clients from Woodhouse. Woodhouse Day Spa sought to enforce the non-compete clause, and Abuayasha filed a complaint to prevent it from being enforced.
Judge Powers ruled that the agreement could only be enforced if it “protects the
“legitimate” interests of the employer, imposes no undue hardship on the employee, and is not injurious to the public,” and that “[a] restraint on the employee is illegal when its purpose is the prevention of competition, except when the methods of competition to be prevented are methods commonly regarded as improper and unfair.”
Powers held that the non-compete clause could not be enforced, because “the only legitimate interest is Defendants’ interest in its client relationships,” which could be protected by a much narrower clause that only sought to prevent Abuayasha from soliticing Woodhouse Day Spa clients, rather than broadly seeking to prevent her from competing within a five mile radius for two years.
Powers also held that Abuayasha’s termination “may constitute an undue hardship,” and thus the non-compete clause should not be enforced. He reasoned that when an employee loses their job due to breach of an employment agreement by the employer, enforcing a non-compete may be an undue burden on the employee. Here, Abuayasha alleged that she was wrongfully terminated in violation of the New Jersey Conscientious Employee Protection Act and the New Jersey Law Against Discrimination, therefore enforcement of the non-compete may be an undue hardship.
Traditionally, non-competes were found in fields like technology or sales, where trade secrets are closely held and specialized skills are often required. But now, non-competes are so common that you might be required to sign one to work as a factory manager, camp counselor, yoga instructor, or even a summer intern.
Just because an employer requires an employee to sign a con-compete agreement, it does not necessarily mean that it is valid and can be used against the employee. In New Jersey, non-compete agreements are viewed unfavorably as restraints of trade.
Did you sign a non-compete when you started with your employer? Have you been asked to sign one after you’ve been working for your employer for some time? Contact this office and we can help you determine whether it affects your ability to get a new job in your field.