Top 3 Reasons to Seek Help Regarding for Non-Compete Agreement
Based on our experience, following are the three (3) most common reasons people reach out for urgent help regarding their particular non-compete:
- 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.
Are Non-Compete Agreements Still Enforceable Under New York Law?
While it is definitely true that a number of states across the country have taken steps to rein in non-compete agreements, and now, more recently, President Biden issued an Executive Order setting forth his vision for substantially cutting back the reach of non-compete agreements, the fact remains that many companies are still pushing their employees to sign restrictive covenants - whether they are really called for in a particular circumstance or not.
At this point in time, it's still not a clear-cut, across-the-board answer to the question posed above.
And the reason for this is because the answer as to whether a particular agreement would be enforceable by a New York court often hinges on the answer to a number of other questions, such as the following:
- Is this really a non-compete, in the full sense of the term, or is it really more accurately categorized as a non-solicit clause?
- Does the agreement looking to protect information that qualifies as a confidential trade secret, or is the information it seeks to protect the type of information that can be readily found on the internet from simple Google search?
For more information on this important topic, please download a free copy of our book, To Compete or Not to Compete - the Definitive Insider's Guide to Non-Compete Agreements in New York.
3 Crucial Tips to Keep in Mind About Non-Compete Agreements in New York
- 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 (or Should) Look to Protect an Employer's Legitimate Proprietary Interests. While it is true that New York's courts are loath 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.
- The Courts Will (or Should) Give Greater Weight to Restrictive Covenants When the Defendants Were Compensated for Them. In a number of instances, such as where the plaintiff paid good money to buy the goodwill of the defendants' business, New York's courts (as well as in several other jurisdictions) have taken a much harder line against defendants, and looked to enforce noncompete clauses, because, after all, this is precisely what the defendants were paid for; it would be manifestly unfair to allow the defendants in such cases to reap the benefits of selling their business and then immediately go out and dilute the value of the sale to the plaintiffs. In New York, this has come to be known as the Mohawk Doctrine, after a well-known case from the Court of Appeals that squarely addressed this issue. Other instances where the courts have proven more inclined to enforce restrictive covenants include where the now former employees were given benefits or otherwise paid garden leave in exchange for agreeing to abide by the terms of the restrictive covenant, which has come to be known as the Employee Choice Doctrine.