Non-Compete Agreements: Can My Employer Really Prevent Me From Working For Their Competitors After I Leave?

Although generally disfavored by New York Courts, non-compete clauses/agreements are still considered enforceable in New York, so long as they meet some basic guidelines. For the most part, any restriction on a person's ability to earn a livelihood will be heavily scrutinized by courts; however, there are equally legitimate interests that employers have a right to protect. Striking a fine balance between these interests requires that non-compete agreements be tailored very specifically to the facts and circumstances of your employer-employee relationship and the industry within which the employer operates their business.

According to New York law, a court will enforce a non-compete agreement only when the employer can establish the following:

The restriction is reasonable in time and geographic scope;
The restriction is necessary to protect a legitimate interest of the employer;
- These interests could include:
  - Protecting goodwill or customer relationships,
  - Preventing disclosure or use of confidential information or trade secrets,
  - Reliance on an employee who possesses unique or extraordinary talents, e.g., musicians, actors, professional athletes, an individual whose skills and talent cannot easily be replaced.
The restriction is not unreasonably burdensome to the employee; and
The restriction is not harmful to the general public.

When it comes to the time and geographic scope of the restrictions, the courts will look to whether they are reasonable given the nature and circumstances of the employer's business. For some industries, a one year restriction might make sense, while in others it could be considered unnecessarily burdensome. Generally, restrictions of six months or less are found to be reasonable. For geographic restrictions, a similar approach is taken. A non-compete provision that restricts the employee from any competition within a ten mile radius of the employer's business might be completely unreasonable in one circumstance, while a nationwide restriction may be considered necessary or reasonable for another circumstance. In some instances, NY courts may consider enforcing a very broad restriction, if the duration is for a limited period of time. These situations are quite fact specific, so depending on the industry and the restrictions, a non-compete agreement can go either way.

When it comes to considering the effect that a non-compete agreement has on an employee's livelihood, courts will consider whether it imposes an unreasonable hardship on the employee. However, focusing on the employee's ability to earn a living must be weighed against their ability to capitalize on the information, clients, trade secrets, etc. that they encountered while working for their employer. Other ways in which we see this issue is when it comes to professionals, especially lawyers. For example, any non-compete agreement that attempts to restrict a lawyer's ability to practice law will be struck down.

Finally, courts will look to see whether a non-compete agreement is harmful to the general public. This often requires courts to consider public policies around fairness, competition, general welfare and anything that benefits the public at large. For example, non-compete clauses that restrict a doctor's ability to practice medicine would violate public policy simply because the public in general benefits when there is greater access to healthcare. For most non-compete agreements; however, this is an easy hurdle for employer's to overcome because, for the most part, the general public is rarely affected by these agreements.

Non-compete agreements must be tailored to the specific needs and expectations of the employer in order for them to be enforceable in a court of law. Since the very nature of these agreements is restrictive, courts tend to scrutinize them more closely and are hesitant to uphold overly burdensome agreements. If you are asked to sign a non-compete clause/agreement and have questions, speak with an experienced attorney who can guide you through this process.

Disclaimer: This blog post and similar posts are not to be considered as providing legal advice. The discussion here is meant for educational and informational purposes only and shall not create an attorney-client relationship with the readers of this content.