ADP’s Non-Competes Upheld but Remanded to Judge for Tailoring

Payroll company ADP LLC didn’t violate New Jersey antitrust laws by conditioning some stock options on non-compete agreements, but a judge will have to decide if some of their terms were overbroad.

The U.S. Court of Appeals for the Third Circuit upheld the restrictive covenants in principle April 26, reversing a New Jersey federal judge’s decision to strike them down.

But the court acknowledged that the agreements may be more restrictive than necessary. It directed the trial judge to narrow their scope as needed under the state law doctrine of “blue penciling,” which lets courts partly rewrite restrictive covenants to ...