Many New Jersey businesses and employees make the mistake of using generic contracts found online. These “boilerplate” documents often fail to account for New Jersey’s specific legal nuances, leading to costly disputes down the road.

For Employers

• Misclassification Risks: New Jersey uses the strict “ABC Test” to determine if a worker is an employee or an independent contractor. A generic contract may not protect you from a Department of Labor audit or a misclassification lawsuit.

• Unenforceable Non-Competes: If your non-compete clause is too broad geographically or in duration, a New Jersey court may strike it down entirely, leaving your client list exposed.

• IP Theft: Without specific “Work for Hire” and intellectual property assignment clauses, you may not own the code, designs, or client data your employees create.

For Employees

• Restrictive Covenants: You may inadvertently sign a non-compete that forces you to move out of state to find work in your field after leaving a job.

• Vague Bonus Structures: Contracts that leave bonuses entirely to “company discretion” often result in zero payout, even after you hit your targets.

• “For Cause” Definitions: If “Cause” for termination isn’t clearly defined, you could lose your right to severance pay over a minor misunderstanding.