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When is a non-compete agreement enforceable in New York?

On Behalf of | Dec 21, 2022 | Firm News |

Sometimes employees want to find a new job. They may be unhappy with their current job, they may get a better offer elsewhere or they may simply want a change of pace.

Employers, though, have an interest in keeping those they hire in their employment. They may have specifically trained the employee giving them specialized skills. The employee may have access to client lists or trade secrets.

Employers do not want competitors to benefit when a former employee takes on a new job with the competition. So, the employer may ask the employee to sign a non-compete agreement.

Defining a non-compete

A non-compete agreement is a contract between employees and an employer. It states that the employee will not work for a competing business within a certain geographic area and for a certain amount of time after leaving their job with the employer.

Are non-competes enforceable?

Non-competes are legal in New York, but they can only be enforced under certain circumstances.

First, a non-compete must be necessary to protect the legitimate interests of the employer.

Legitimate interests may include things like client lists and trade secrets. Employers also have a legitimate interest in preventing the specialized skills they taught their employees from being used by a competitor.

Second, a non-compete cannot cause the employee to suffer an undue hardship.

Third, a non-compete cannot cause the public any harm.

Fourth, a non-compete must be reasonable in the amount of time and geographic area it covers.

The restrictions in a non-compete cannot be any more than is necessary to prevent harm to the employer’s legitimate interests. It is possible to rule that some parts of the non-compete are enforceable and some parts are not.

Signing a non-compete

An employee may sign a non-compete when they are hired or while they are employed. Employees cannot be told they must sign a non-compete to keep their job. If so, they may not read it before signing, making it unenforceable.

Employees who are presented with a non-compete will want to read the document thoroughly before signing, to ensure they understand what it means. If an employee does not like a term in the non-compete, it can be negotiated. This is because non-competes are essentially contracts.

Ultimately, non-competes should benefit the employer without posing an undue burden on employees. Employees and employers with employment disputes regarding a non-compete may need to take the matter to court.