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New York requirements for a valid noncompete agreement


Many employers are concerned that a valued employee with in-depth understanding of the business will leave to work for a key competitor or start a competing business. At the same time, it is normal for a person to make career moves within the same industry, building on previous experience.

New York noncompete law is highly developed

As a key commercial center, New York has developed laws that are specific and complex on the issue of what enforceable limits an employer can place on an employee’s future jobs. The Empire State allows noncompetition agreements, usually called “noncompetes,” but they must meet standards that balance the economic interests of both employer and employee.

Typical noncompete provisions

Noncompetition agreements are often imposed as a condition of employment, normally preventing an employee from leaving to join a competing business or to establish a business that will compete with the original employer’s market. Limits may apply for a specific time period and within a defined geography.

For example, the agreement may prevent the employee from competing for two years within a 50-mile radius of the employer’s business.

Requirements for noncompetition agreements or clauses in New York

In New York, a noncompete is enforceable within these parameters:

· It can only focus on protecting the employer’s legitimate business interests.

· It may not be unduly burdensome on the employee.

· It cannot harm public interest.

· Time and geographic restrictions must be reasonable.

Under the first prong, New York courts have identified legitimate employer interests to include trade secrets, customer lists, protection from competition with a former employee with extraordinary or unique abilities and protection from misappropriation of customer goodwill that the employer had cultivated.

What actions can the court take involving noncompetes?

Should an employer and employee dispute their noncompete’s limits or enforceability, they may be able to negotiate a settlement agreement to both. If not, the matter may end up in court, where the enforceability of the restrictions on competition will be determined.

The court will analyze the particular circumstances and, depending on their findings, will take the appropriate course of action. This means the court could order the ex-employee to stop certain activity, such as using trade secrets or calling on customers of the previous employer, or perhaps declare the noncompete entirely void. Other possible results include the court only enforcing portions of the agreement, or reforming certain unreasonable provisions to make them enforceable, such as changing a limit on national competition to a statewide limit. The court may also declare the noncompete entirely void.

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The Attorneys of Katz Melinger PLLC