The New York commercial landscape is a battleground where business interests are fiercely contested. One protective measure that companies often utilize in this environment is the non-compete agreement. These agreements are clauses in employment contracts that restrict an employee from working in a similar profession or trade in competition against their employer for a certain period after their employment ends. The question, however, often arises as to how enforceable these non-compete agreements are in New York.
The Balance of Interests
Non-compete agreements represent a balancing act between two valid legal considerations: the right of businesses to protect their proprietary information, and the freedom of individuals to pursue employment. New York courts strive to strike this balance by assessing several factors, such as the need to protect legitimate business interests, the potential harm to the public, and the potential undue hardship on the employee.
Protecting Legitimate Business Interests
For a non-compete agreement to be enforceable, New York courts require that it must protect a legitimate business interest. Legitimate business interests typically include protecting trade secrets, confidential customer lists, and unique or extraordinary skills that would give a competitive advantage to another employer.
Potential Harm to the Public
Another consideration that courts weigh is the potential harm to the public. For instance, if enforcing a non-compete agreement would create a monopoly or deprive the public of necessary services, courts are likely to find the agreement unenforceable.
Undue Hardship on the Employee
Non-compete agreements cannot impose an undue hardship on an employee. This means that agreements which overly restrict an employee’s ability to find work in their field are likely to be struck down. Courts will consider the duration, geographic scope, and breadth of activity prohibited by the non-compete agreement. Broadly speaking, agreements are more likely to be enforceable if they are reasonable in time and geographical scope.
Recently, the trend in New York has been towards a stricter scrutiny of non-compete agreements. Legislation has been proposed to further limit the enforceability of these agreements, potentially prohibiting them for low-wage workers and requiring employers to pay a certain percentage of the employee’s salary during the period of non-competition. While these changes have not yet been implemented, it highlights the dynamic nature of non-compete law and the need for businesses to stay abreast of these developments.
Contact Our Skilled New York City Business Transactions Attorney Today
Non-compete agreements play a crucial role in protecting businesses in New York, but their enforceability is contingent upon a balance of interests and evolving legal standards. Businesses should be mindful to draft these agreements in a way that is fair, reasonable, and in line with current legal standards to ensure their enforceability.
In this ever-evolving legal landscape, it is crucial for businesses to get expert legal advice when drafting and enforcing non-compete agreements. Levy Goldenberg, a premier law firm with a strong track record in business litigation, is well-equipped to help businesses navigate these complexities.
Reach out to Levy Goldenberg today to ensure your business is well-protected and your agreements are up to the task.