The Biggest Hurdle to Enforcing a Non-Compete in New York
As compared to a non-solicit provision, an employer will have a much harder time enforcing a non-compete provision against a former employee. And the reason for this is rather straightforward: unlike the non-solicit, which only seeks to prevent the former employee from pursuing, or poaching the company’s client base (or its employee roster), a non-compete seeks to prevent the employee from getting a new job with a competitor – whether or not he actually will go after the same business that he was working on while at his old job.
Consequently – and logically – New York’s courts have set the bar much higher before honoring a non-compete. After all, banning someone from taking what seems to be a better job should not be undertaken lightly.
One of the rare circumstances where a New York court will honor, and enforce a non-compete, is where the former employee is “unique.” But that’s not a question of whether the employee is 1 in 10, 1 in 100, or even as my grandmother likes to say about her grandchildren, that they’re “1 in a million.”
In order to best understand this concept, we really need to first begin with what clearly isn’t unique. New York’s courts have stated in very clear terms that an employee is not considered unique, for purposes of enforcing a non-compete, just because she has a special talent. Nor, for that matter, is an employee considered unique just because he knows the inner workings of your business
In assessing an employee's uniqueness for purposes of enforcing a restrictive covenant, a court’s inquiry "must of necessity be on a case-by-case basis."
That said, New York’s courts have found that an employee was, in fact, “unique” where the following criteria were met;
(1)The employee worked in a highly specialized field with a small potential pool of clients;
(2)The employee’s success depended on his ability to cultivate a relationship with his clients; and,
(3)The plaintiff, and former employer, was able to demonstrate with competent evidence – not just their say-so – that they had expended a lot of time, money and effort to help cultivate those special relationships.
For additional information on this topic, I strongly suggest that you download a copy of our Free guide to non-compete agreements under New York law, by clicking on this link.