In order to protect sensitive information and their vital interests from competitors, New York businesses often enter into Non-Compete Agreements (NCAs). Under the terms of a Non-Compete Agreement, a company can restrict its employees, contractors, or former employees from engaging in certain competitive activities after they leave the company.

Although NCAs are often used to guard confidential information and intellectual property from competitors, the law surrounding them can be complex. Therefore, if you’re a New York business owner considering entering into an NCA, it is important to consult an experienced attorney to ensure that your agreement complies with the relevant legal requirements. In this article, we’ll discuss the key elements to consider when getting started on a Non-Compete Agreement in New York.

Understanding New York’s General Non-Compete Agreement Requirements

Non-Compete Agreements are governed by state law. In New York, there is no single statute expressly governing NCAs. However, the general non-compete agreement principles applied by New York courts are outlined in numerous case law opinions.

In New York, non-compete agreements are subject to enforcement unless they are found to be "unduly oppressive and against public policy." This means that, when evaluating an NCA, the court will consider whether its restrictions are (1) appropriate with regards to the interests of the parties; (2) reasonable with regards to geography, duration, and scope; and (3) consistent with public policy. When deciding whether an NCA is unenforceable, courts will balance the employer’s interest in protecting their confidential information and proprietary information against the employee’s interests in being able to pursue other employment opportunities in their field of expertise.

Preparing a Non-Compete Agreement

When preparing an NCA, there are a few key elements to consider in order to ensure that the agreement accurately expresses the terms of the parties. These elements include:

The names of the parties to the agreement;

A description of the employer's confidential and proprietary information that is being protected;

The geographic scope and duration of the non-compete agreement;

The types of products or services to be restricted under the NCA; and

A provision detailing the remedies for a breach of the NCA.

In addition, while not required, it is usually beneficial to include a “severability clause” in the NCA. This clause allows a court to determine that specific language included in the agreement is unenforceable, instead of invalidating the entire agreement.

Consulting an Attorney

Although the language in an NCA must be tailored to a business’s specific needs, there is a common misconception that a party can "just use the 'standard' agreement". This can lead to serious trouble down the line if a business fails to meet the legal requirements for an enforceable NCA.

Since the law in New York is complex and NCAs are enforced differently depending on the jurisdiction, it is crucial to consult an attorney who is familiar with the relevant New York laws. This is especially true if you are planning to enter into an NCA with an employee, independent contractor, or business partner in another state.

At UpCounsel, we offer an extensive network of experienced lawyers that specialize in New York laws around Non-Compete Agreements who can assist you in preparing and negotiating your NCA. Whether you require a one-time consultation or an entire freelance legal department, UpCounsel’s team of attorneys is knowledgeable and experienced in the laws surrounding NCAs in New York.

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