Business in New York can be highly competitive, and relies, in part, upon a business’s ability to protect valuable information disclosed to current and past employees.
Many NY companies feel that implementing non-compete agreements and other contractual obligations will encourage employee retention overall and protect information should an employee leave.
It is important for New York businesses to understand, however, that there are restrictions to when and how non-compete agreements can be enforced. Traditionally, non-compete agreements in New York are used in companies and industries involving sensitive proprietary information and/or trade secrets.
Non-compete agreements are commonly found across many industries regardless of size or products or services offered. They can take many forms depending on the information to be protected, including confidentiality agreements (prohibiting use or revealing information) and non-solicitation agreements (prohibiting approaching customers, poaching employees or contacting vendors).
New York Courts consider the enforcement of a specific non-compete agreement on a case-by-case basis. The following issues are, often, consider by New York judges.
- Can the employer establish that the non-compete agreement is necessary and relevant for the position and industry in question?That includes articulating the potential harm to the employer should a breach occur.
- Does the non-compete agreement draw clear and reasonable restrictions?
- Does the non-compete agreement draw a definite time period.
- Does the non-compete agreement impact necessary to achieve the desired result?
- Does the non-compete agreement harm the livelihood of the employee (alternative opportunities)?
- Was compensation paid in exchange for the covenant?
The issue with drafting non-compete agreements is, often, determining what is “reasonable” with regards to each consideration. While we suggest that you to read our previous posting on how to create a valid non-compete clause in New York, which provides a sense of what New York jurisprudence considered “reasonable,” nothing can substitute the advice of a New York attorney in the drafting of these important business document.