Non-compete agreements are becoming increasingly popular among employers looking to protect their businesses. In New York State, these agreements are governed by specific laws that dictate the terms and conditions of the agreement.
Here’s what you need to know about non-compete agreements under New York law:
What is a non-compete agreement?
A non-compete agreement is a legal document that prohibits an employee from working for a competitor or starting a competing business for a certain period of time in a specific geographic location. These agreements are designed to protect businesses from losing valuable talent and trade secrets.
Under New York law, non-compete agreements are only enforceable if the employer can prove that they are necessary to protect a legitimate business interest, are reasonable in scope, and do not impose an undue hardship on the employee.
What is a legitimate business interest?
A legitimate business interest may include protecting trade secrets, confidential information, customer relationships, or investment in specialized training or education. Courts will evaluate each case on an individual basis to determine if a legitimate business interest exists.
What is reasonable in scope?
Non-compete agreements must be reasonable in terms of the geographic scope and the duration of the restriction. For example, a non-compete agreement that prohibits an employee from working in the same industry for the rest of their life would likely be deemed unreasonable. On the other hand, a non-compete agreement that prohibits an employee from working for a competitor within a 50-mile radius for a period of one year would likely be deemed reasonable.
What is an undue hardship?
Employers cannot impose undue hardship on their employees by enforcing a non-compete agreement. An undue hardship may include, but is not limited to, a severe restriction on an employee’s ability to find work or earn a living. Courts will evaluate each case on an individual basis to determine if an undue hardship exists.
What are the consequences of violating a non-compete agreement?
If an employee violates a non-compete agreement, the employer can seek injunctive relief to stop the employee from working for a competitor or starting a competing business. The employer may also seek monetary damages.
Non-compete agreements are an important tool for employers to protect their businesses. However, these agreements must be carefully drafted to ensure that they are enforceable under New York law. Employers should work with experienced legal counsel to draft non-compete agreements that are reasonable in scope, protect legitimate business interests, and do not impose an undue hardship on employees.