A non-compete agreement can benefit an employer greatly. Non-compete agreements are legally-binding contracts or clauses in a contract in which an employee agrees not to work for a competitor in the same industry while working for your company and even for a period of time after they stop working with you.
These agreements can adversely affect an employee’s mobility within an industry, limiting their employment options and therefore hurting their earning potential. Because of this, the state of New York is relatively reluctant to enforce such agreements. New York’s public policies so strongly favor a person’s right to gainful employment that the enforceability of a non-compete agreement is contingent on very specific circumstances.
Non-compete agreements are also known as “restraints of trade,” meaning they can’t be enforced if they’re deemed unreasonable. To illustrate this, a non-compete agreement that exists solely to restrict competition would be deemed unreasonable, as it is both too broad and too vague.
However, one way in which a non-compete agreement that restricts competition could become reasonable is to make the language in the contract or clause more specific. In other words, you need to have a good reason to enforce it.
Examples of this include an employer who introduces his or her best customers to the employee, or an employee who learns company secrets instrumental to its success while working for them. In the first case, it’s reasonable for the employer to worry about their best customers following their now-former employee elsewhere. Similarly, the employer may be legitimately concerned that their now-former employee will use these company-specific trade secrets if they ever choose to work for one of their competitors in the latter case.
There are certain limitations on a non-compete agreement’s enforceability, though. Usually, these are geographic and/or temporal restrictions, meaning the reasonableness of a non-compete agreement is dependent on its geographic scope and the time frame in which it can be enforced.
Of course, these restrictions vary from case to case. A non-compete agreement with a statewide geographic scope may only be reasonably enforceable for up to a month, whereas an agreement that is longer in length may only be enforceable in a handful of cities.
Generally speaking, non-compete agreements will be enforced if they do not pose undue hardship on the employee, do not exceed the basic requirements to protect the reasonable business interests of the employer, and are not harmful to the public.
Furthermore, non-compete agreements that are reasonable both in time and geographic scope will only be enforced to prevent employee disclosure or solicitation of trade secrets, in cases where an employee offers “special and unique” services to their employer, or to prevent an employee from releasing confidential information about the employer’s customers.
Whether you’re an employer looking to enforce a non-compete agreement or an employee looking to get out of one, we’ve got you covered. The Bergstein Flynn & Knowlton team has been using their combined business law knowledge and courtroom experience to help New Yorkers successfully navigate these tricky contracts and clauses for years, and we’d love to do the same for you. Contact us today to learn more about how we can help you.
