In the context of noncompete agreements, employers often insert clauses whereby the employee concedes that the breach of any of the restrictive covenants would automatically constitute irreparable harm, and therefore entitle the employer to an injunction.
But is such a clause enforceable under New York law?
Not necessarily.
What a New York Federal Court Stated Regarding this Question
Consider the following language from a recent federal court holding in LoanDepot.com LLC v. CrossCountry Mortgage, LLC, et al:
In their employment contracts with [plaintiff], Individual Defendants “acknowledge[d] that monetary damages alone will not be a sufficient remedy for . . . breach of any provision” of [plaintiff]’s confidentiality or non-solicitation agreements, and that [plaintiff] “shall be entitled to specific performance, injunctive relief, or . . . other equitable relief . . . .”
Such clauses in employment contracts “do not control the question whether preliminary injunctive relief is appropriate.” JTH Tax, LLC, 62 F. 4th at 674.
While ex-ante acknowledgements that a party may obtain injunctive relief “may be entitled to weight,” magic words in a contract do not alone turn what might otherwise be a “remote” or “speculative” injury into one that is “actual and imminent.” Id. at 672-74. A plaintiff “must present the district court with actual evidence . . . that the plaintiff ‘will suffer an injury that is neither remote nor speculative, but actual and imminent.’” Id. at 673 (emphasis added).
