Non-Compete Agreement Lawyer Jonathan Cooper Weighs in on Non-Compete Clauses Under New York Law
Non-Compete & Employment Agreements
If you've come to this page, chances are that you are here for one of three (3) reasons:
- Your former employer has sued - or is threatening to sue - over the purported violation of a non-compete clause in your employment agreement;
- You're thinking of leaving your current job - either to start your own business or to work for someone else, but want/need some clarity whether you are barred from doing so by the non-compete clause in your contract; or,
- Your former employee has been poaching your clients and/or customers, and you want to know whether that employee's non-compete agreement is enforceable, and if so, what your legal rights are.
SOME COLD, HARD TRUTHS
- New York's Courts Dislike Non-Compete Agreements. And lest you think that this is some sort of "unofficial" policy, let me disabuse you of that notion; the courts have expressly said that they will look to invalidate these clauses. "Why?" you ask. Because the courts favor a free market economy, where both people and ideas flow and gravitate toward their (hopefully) most profitable ends. And that means allowing someone to change jobs, and to use those skills that were gained and mastered to earn a greater paycheck. On the other hand ...
- The Courts will Protect an Employer's Legitimate Proprietary Interests. While it is true that NY's courts are loathe to enforce a non-compete, there are circumstances where they are obliged to do so, in order to assure a level playing field in the business arena, and disallowing unfair competition or tortious interference by current or former employees or competitors.
WHAT A FORMER EMPLOYER CAN DO IF A NON-COMPETE WAS (ALLEGEDLY) VIOLATED
Regardless of whether you arrive at this topic from the perspective of the outgoing employee or the former employer, it is important to know what the possible and likely options and remedies for each side are. To that end, the former employer (who, in all likelihood would be the plaintiff), has a number of choices, including the following:
- The employer can seek injunctive relief from the court (in legalese, this is known as a "Temporary Restraining Order" or "TRO" for short), barring this former employee from working for a competitor;
- The employer can, under certain circumstances, recover the money he paid the employee if the employee was disloyal on company time;
- The employer can, in limited circumstances, try to recoup the profits that were lost as a result of the former employee's disloyalty; and,
- Where the employment agreement contains such a provision, the employer can seek to recover liquidated damages from the former employee
WHAT A FORMER EMPLOYER (PROBABLY) CAN'T RECOVER
Generally speaking, there are two forms of damages that a former employer will almost certainly not be able to recover from a departing employee:
For additional information on these topics, I urge you to download our Free Guide, "To Compete or Not to Compete: The Definitive Insider's Guide to Non-Competes in New York."
- Unjust Enrichment.
One of the most common claims that companies make against departing employees is that their new employer has unfairly piggy-backed on their work effort and investment, which is referred to as "unjust enrichment." In the non-compete realm, these claims usually fail because, as one appellate court noted, "[T]he mere fact that the plaintiff's activities bestowed a benefit on the defendant is insufficient to establish a cause of action for unjust enrichment," Clark v. Daby, 300 A.D.2d 732 (3d Dep't 2002). In other words, the causal chain between the new and fotrmer employer is, from the courts' perspective, too attenuated.
Damages that are Unduly Speculative. At the risk of stating the obvious, unless the former employer can identify specific clients, accounts or damages that they suffered as a direct result of the former employee's (wrongful) actions, the case will go nowhere in a hurry. Courts will afford a short leash to a plaintiff's claims that "it is impossible to tell the full extent of the damages wrought by the defendant's actions." If you are the plaintiff, you have to be prepared to prove your damages with competent evidence.
Blog for Non-Compete & Employment Agreements
- The Noncompete Case Had Huge Holes. It Almost Didn't Matter
Description: One of the most frequently overlooked aspects of a lawsuit is that fundamental question as to how likeable - or un-likeable - a client is to a court or jury
- Court: Just Because Non-Compete Says It Doesn't Make it So
Description: A recent decision from a Massachusetts trial court declining to issue a TRO barring a former employee from taking a new job is instructive for employers
- Can Existing Employees Be Forced to Sign Non-Competes in NY?
Description: The answer as to whether an employer can force their employees to sign a non-compete mid-stream is a bit complicated, and depends on your jurisdiction
- 3 Best Ways to Protect Trade Secrets When Employees Resign
Description: There are 3 practical, easily implemented strategies for protecting your trade secrets against unfair use by competitors, explains Jonathan Cooper
- NY Appeals Court: Firing Without Cause Vitiates Non-Compete
Description: In a recent decision, one of NY's appellate courts weighed in on whether firing an employee without cause inherently vitiates their non-compete
- Is a Non-Solicit Clause Synonymous with a Non-Compete?
Description: In a hot-off-the-presses decision striking down a noncompete, a Wisconsin appeals court broadens the term far beyond how it's been understood elsewhere, like NY
- Did Schneiderman Go Too Far in Jimmy John's Noncompete Fight
Description: On June 22, AG Schneiderman issued a press release touting the settlement he reached with Jimmy John's over their non-competes. But did he go too far?
- New WH Report Signals Changes to Non-Competes Are Coming
Description: A May, 2016 report from the White House lays out in broad terms its view on how the states should impose further limits on non-competes, says Jonathan Cooper
- How One State Nails Employers Who Go Too Far on Non-Competes
Description: One State just passed legislation that truly sticks it to employers who are overly aggressive with their non-competes, explains NY attorney Jonathan Cooper
- Does Bankruptcy Immunize Company From Non-Compete Claims?
Description: When OfficeMax and A & P squared off over a senior level employee's non-compete, Court was called to address whether bankruptcy rendered the case moot
- How Employee Recovered Commissions Earned Post-Termination
Description: A poorly drafted employment agreement allowed a former employee's claim to recover commissions that were earned post-termination to survive dismissal
- When a NY Company's Ability to Fire At Will Goes Too Far
Description: New York's Court of Appeals' dismissal of a wrongful termination/breach of contract claim by a compliance officer in Sullivan v. Harnisch is troubling.
- Is My Non-Compete Agreement Enforceable Under New York law?
Description: In response to the significant number of times I've been asked this question, here's a summary of what New York's highest court has said on the subject
- DOJ: Non-Compete Agreements in Hi-Tech Sector Go Too Far
Description: NY non-compete lawyer Jonathan Cooper law explaining non-compete agreements and non-solicitation agreements in New York
- When a NY Court Will Enforce a Noncompete - and Grant a TRO
Description: NY non-compete lawyer Jonathan Cooper explains why the lawsuit with Microsoft suing Salesforce.com for a non-compete clause would told tight with NY law.
- How an Employee Manual's Whistleblower Clause Was Worthless
Description: A NY trial court's decision to dismiss a bank employee's breach of contract & wrongful termination claim serves a clear warning to at-will employees everywhere
- Courts Push Promising New Tool to Reduce E-Discovery Costs
Description: Federal courts have started to promote a promising technology that should reduce significantly litigants' electronic discovery costs, explains Jonathan Cooper
- When NY Courts Will Uphold Non-Compete Clauses - No Matter How Unreasonable
Description: There is an extremely important exception to the New York Courts' express disfavor for non-compete agreements: the employee choice doctrine.
- When NY Employers Condition Receipt of Post-Employment Benefits on a Non-Compete
Description: As you may be aware, it has become increasingly common for employers to condition their employees' receipt of post-employment benefits upon the employees' agreement to abide by a strict non-compete clause.
- How a Demotion Can Be Deemed a Breach of Employment Agreement Under NY Law
Description: Consider the following hypothetical scenario: Jim is hired by ABC Stores as Executive VP of Sales and Marketing.
Videos about Non-Compete & Employment Agreements:
- When a Business's Customer Lists Are Fair Game in New York
- The Top 5 Ways to Get Around a Non-Compete in New York
- When NY Courts Must Honor Non-Competes - Even Unreasonable Ones
- The Biggest Hurdle to Enforcing a Non-Compete in New York
- How a NY Co. Pushed Too Hard on VP's Non-Compete & Lost Big
- Where NY Draws the Line Between Proper & Improper Solicitation
- How NY Courts Decide if Your Non-Compete is Enforceable
- When New York Courts Will Imply a Non-Solicit
- The Best Way Around a Non-Compete in New York - Period.
- Are Customer Lists Protected Under New York Law?
- The 4 Legitimate Interests That a NY Non-Compete May Protect
- How Long Can a Non-Compete Last Under New York Law?
- The 9 Kinds of Claims for Violating a Non-Compete in NY
- The Insider’s Guide to Non-Compete Agreements in New York
- How Far Can a Non-Compete Reach (& Still Be Enforceable)?
Library for Non-Compete & Employment Agreements:
- How Employers Can Get Money Back for Breach of a NY Employment Contract
Description: There are some instances where an employer can get its money back for breach of contract, explains attorney Jonathan Cooper.
- Demotion May Abrogate Noncompete, But Does That Hold True for Nonsolicit? [PDF]
Description: In the August 10, 2015 edition of the New York Law Journal, Jonathan Cooper notes that NY's courts have not clarified whether a demotion vitiates a non-solicit
- NY Should Clarify Interplay Between Tortious Interference & Non-Competes [PDF]
Description: New York should clarify the interplay between tortious interference and non-competes, asserts NY non-compete attorney Jonathan Cooper
- When You Can Recover Damages for Theft of Business Goodwill in New York
Description: There are circumstances under which you can recover for theft of your business's "good will" under New York law, explains Jonathan Cooper
- How to Solicit Old Clients Without Breaching a Fiduciary Duty
Description: There are some ways a departing employee can permissibly solicit his old clients, explains NY noncompete attorney Jonathan Cooper.
- Recent Decisions by NY Courts Court Spur Doubt as to Noncompetes [PDF]
Description: My recently published NYLJ article covers recent decisions by NY courts that cast doubt re whether employees fired without cause remain bound to non-competes.
- How Choosing NY for a Non-Compete Can Win or Lose Your Case
Description: An employer's choice of venue can mean the difference between winning and losing a noncompete case, explains NY noncompete lawyer Jonathan Cooper
- The Critical Difference Between a Non-Solicit & a Non-Compete in New York
Description: A Federal Court in New York distinguished between a non-solicit & a non-compete - & the distinction is absolutely critical, explains Jonathan Cooper
- Sample New York Non-Compete Clause
Description: We are often asked what a typical non-compete clause in an employment agreement looks like. Here it is. Long Island, NY non-compete lawyer Jonathan Cooper explains.
- When a Non-Compete Agreement is Enforceable Under New York Law
Description: Long Island & Queens, New York breach of contract and non-compete lawyer Jonathan Cooper discusses when a non-compete agreement is enforceable under NY Law.