When NY Courts Must Honor Non-Competes - Even Unreasonable Ones
One of the first defenses that former employees typically raise in response to a claim that they violated their non-compete agreement is that the agreement was completely unreasonable. That could be for any number of reasons, such as its geographic scope or duration.
But there are some instances where a New York court may agree that the agreement is unreasonable, but may not care, and still hold the employee to the terms of the non-compete.
It’s not as crazy as you may think.
Consider the Employee Choice Doctrine.
This doctrine says that an employer can bind its former employee to a non-compete – even if they fire the employee – so long as the employee agrees to accept severance payments or some other benefits as consideration for signing the non-compete.
The rationale behind this doctrine is grounded in basic contract principles, because the employee is given the option of either honoring the non-compete (and receiving the severance), or going out and competing (and forfeiting the severance).
The critical takeaway about the Employee Choice Doctrine is this:
Once an employee signs off on this non-compete in exchange for severance, a New York court may well enforce the agreement, regardless of whether it overreaches.