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When a Non-Compete Agreement is Enforceable Under New York Law


The truth is, it can be a bit difficult to predict with absolute certainty what a New York court will do when confronted with a non-compete regarding a senior-level, key employee. That said, New York State's highest court has set forth four (4) criteria that will determine whether the non-compete (a/k/a "restrictive covenant") is reasonable, and therefore, enforceable:

 

(1) the restriction does not go beyond that which is needed to protect a "legitimate interest of the employer";

(2) the restriction is not overly broad, and therefore manifestly unfair, to the employee;

(3) the restriction is not "injurious to the public"; and,

(4) the non-compete clause has to be limited - reasonably - both in terms of length of time as well as in geographic scope.

Admittedly, this list isn't exactly a model of clarity - particularly if you're looking to find out whether your (soon to be) former employer's non-compete clause can be enforced against you.

Luckily, the Court of Appeals has gone further, and enumerated some of the factors it will consider in deciding whether to enforce a particular non-compete agreement:

"[N]o restrictions should fetter an employee's right to apply to his own best advantage the skills and knowledge acquired by the overall experience of his previous employment. This includes those techniques which are but ‘skillful variations of general processes known to the particular trade.'

On the other hand ...

"[T]he courts must also recognize the legitimate interest an employer has in safeguarding that which has made his business successful and to protect himself against deliberate surreptitious commercial piracy."

Doesn't that leave us right back where we started? No; Not exactly.

Rather, the courts are obliged to enforce a non-compete (a/k/a a "restrictive covenant") so long as it is needed to keep a former employee from breaching his fiduciary duty and wrongfully disclosing the employer's confidential, proprietary information that it expended time, money and effort to develop.