Understanding Non-Compete Laws in New York
Employers and Employees in New York Must Understand Non-Compete Laws in Evolving Business Landscape2 min read
As the business landscape and the regulations that govern it continue to evolve, employers and employees in New York must understand and comply with non-compete laws. In New York, non-compete laws serve important functions, but there are some important considerations employers and employees should consider when deciding whether to use non-competes and how to negotiate the terms of the non-compete.
What is a Non-Compete Agreement?
A non-compete agreement, or ‘non-compete’, is a legally-binding contract between an employer and its employee that restricts the employee’s ability to enter into competition with the employer. Generally, these agreements prevent employees from working for a competitor during the period of their employment and for a certain period of time after their employment ends.
Under New York law, non-compete agreements are enforceable, but only under certain conditions. In general, in order for a non-compete agreement to be enforceable in New York, it must:
1. Be reasonable in scope, time and geographic area;
2. Be necessary to protect legitimate and legitimate business interests of the employer;
3. Not impose an undue hardship on the employee;
4. Consider the employee’s interests in terms of career path, salary and advancement.
Non-Competes in New York
In New York, non-compete agreements are subject to additional limits and requirements that must be met in order for the agreement to be enforceable. Specifically, New York law imposes additional limits on the duration, geographic area, and scope of the non-compete.
The duration of non-compete agreements must be reasonable and must not be unduly oppressive. Generally, a non-compete agreement in New York should not exceed one year in duration. However, depending on the type and scope of the employer business and the employee’s role, a court may decide that a longer period of non-competition is reasonable.
Likewise, the geographic area of the non-compete must be reasonable. In general, the area covered by the agreement should not be larger than the area in which the employee provided services for the employer. For example, an agreement that prohibits the employee from working for a competitor anywhere within the United States would likely be considered overly broad and thus not enforceable.
Finally, the scope of the non-compete must also be reasonable, meaning that it must not prohibit the employee from engaging in activities that are too far removed from the services the employee provided for the employer. The agreement should only prohibit the employee from engaging in activities that directly would directly impair the employer’s business interests.
To summarize
Non-compete agreements can be an effective tool for employers and employees in New York to protect their respective business interests. However, it is important to understand and comply with New York’s specific requirements and limits when negotiating and drafting such agreements. An experienced business attorney can help ensure that employers and employees remain compliant with applicable regulations and that non-compete agreements are created in a manner that is legally enforceable.
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