A non-compete agreement is a legal contract that restricts an employee from engaging in specific types of competitive business relationships with their employer or former employer. Non-compete agreements have become more popular than ever. Once limited to executives and other high-ranking employees, these agreements are now required by many employers across the board for all levels of employees.
Non-Compete Agreements are Becoming More Popular
It is estimated that 40% of workers in the United States have been asked to sign a non-competing agreement from their employer at some point in their career. Non-compete agreements can harm employees, especially those with mid to low-paying jobs. When an employee signs a non-compete agreement, it can prevent them from seeking employment elsewhere in their geographical location.
If you are being asked to sign a non-compete agreement, or you have already signed an agreement, and you have questions about your options, HKM Employment Attorneys are here to help. We can review your non-compete agreement and help you understand your legal rights and options. The agreement you signed may not be enforceable if it is too restrictive.
When Will New York Courts Strike Down Non-Compete Agreements?
Have you signed a non-compete agreement? are you hoping to take another job, or have you been let go and need to find another job? You may wonder what will happen if your employer or former employer takes you to court over allegedly violating the non-compete agreement. Unfortunately, there is no state law in New York that outright bans the use of non-compete agreements. However, because these agreements often impose nameless burdens on employees, courts disfavored them. New York courts are likelier to strike down non-compete agreements for violating public policy.
Can I Be Sued for Violating a Non-Compete Agreement?
The best way to determine whether you are putting yourself at risk of being sued for violating your non-compete agreement is to speak to an attorney. Thankfully, if your employer asks you to sign a non-compete agreement, a New York court will likely not hold it up if it is challenged in court. There are multiple arguments your attorney can make to challenge the validity of the non-compete agreement you signed. Understanding where many employers err when preparing these agreements can help you defend yourself against the enforcement of a non-compete agreement you signed.
The Employer Breached the Non-Compete Agreement
An employer cannot enforce a non-compete agreement against an employee when the employer has already breached the agreement. If you can demonstrate that your employer has already reached any part of the employment agreement that included a non-compete provision, you can defend yourself if they try to enforce the non-compete clause. For example, if they did not pay you in accordance with every provision regarding compensation in the agreement, it will be nearly impossible for them to enforce the non-compete clause on you.
The Time Period is Too Long
The court strikes many non-compete agreements because they are too restrictive. Most New York courts will not enforce a non-compete agreement if the restriction is for over a year. For example, courts will generally find this time frame too long if the agreement attempts to restrict an employee for two years or more. Sometimes courts will strike down the entire agreement when the time frame is too long. In other cases, courts will modify the agreement by reducing the non-compete period to one year or less.
A Change in Circumstances
If your position as an employee has materially changed since you signed the non-compete agreement, your attorney can argue that the non-compete agreement should be unenforceable. For example, suppose you sign the non-compete agreement five years ago when you join the company. Since then, you have been promoted twice and increased your duties and responsibilities. Your attorney may be able to argue that the prior agreement is out of date and should not be enforced.
The Geographic Area of Restriction is Too Broad
If the geographic area in the non-compete agreement is too broad, a court is likelier to strike it down. Generally, if the non-compete agreement covers a geographic area that exceeds the reach of the employer’s business, it is likely unenforceable. For example, if a company operates in Manhattan, it may not be able to prevent employees from working in other areas of the state. The best way to identify the strongest arguments against your non-compete agreement is to speak to an attorney with experience and knowledge related to New York’s non-compete laws.
Preparing and Negotiating a Non-Compete Agreement in New York
Although courts are more willing to strike down non-compete agreements than ever, some non-compete agreements are still enforceable. If you are an employer, discussing your non-compete agreements with an attorney can save you time and money and potentially limit legal claims and litigations later. If you do have legitimate trade secrets and confidential business information you need to protect, it is crucial that your non-compete agreement will hold up if challenged in court. At HKM Employment Attorneys, we have helped many businesses in New Paltz, New York, and the surrounding area prepares effective non-compete agreements. We can help you draft a non-compete agreement that is limited enough in geographic scope and time to withstand a legal challenge likely.
Our attorneys have experience drafting these types of agreements and other business documents effectively. Instead of waiting until there is a legal problem, you can protect your business and rights by working with an attorney to ensure that your trade secrets and business information stay in safe hands.
Discuss Your Case With an Experienced Attorney
Do you have questions about a non-compete agreement? Would you like an attorney to review a non-compete agreement your employer has asked you to sign? If so, the New Paltz, New York attorneys at HKM Employment Attorneys are here to help. Contact us today to schedule a case evaluation and learn more about how we can advocate for your rights.
Non-Compete Attorneys in New Paltz, New York
A non-compete agreement is a contractual agreement that prohibits an employee from opening a competitive business or working for a competitor during and after their employment. Non-compete agreements can also be part of a severance agreement. An employer may agree to pay an employee a severance package in exchange for the employee agreeing not to sue their employer. A non-compete clause restricts the employee from working for a competitor for a specific period and within a specific geographic area after leaving employment. The non-employment agreement may prohibit employees from taking employees and customers with them.
Are Non-Compete Agreements Enforceable in New York?
New York courts will enforce non-compete agreements, but only under certain circumstances. The non-compete agreement must:
- Be necessary to protect the employer’s legitimate interests
- Not impose an undue hardship on the employee
- Not harm the public, and
- Be reasonable in the time period and geographic scope
If you suspect that your non-compete agreement may not be legal or may have provisions in it that are unconscionable, you should reach out to an attorney. The non-compete agreement may be unenforceable. In some cases, a court may consider portions of the non-compete agreement unreasonable, such as the geographic scope or length of time, and eliminate those specific conditions. However, in most cases, when courts decide to invalidate a non-compete agreement, they will rule the entire agreement unenforceable.
What is a Legitimate Interest?
For the non-compete agreement to be legally valid, the employer must prove that they have a legitimate interest. In New York, a legitimate interest can include the following:
- Protecting the employer’s trade secrets
- Protecting the employer’s confidential information
- Preventing employees from taking specialized skills they gained on the job to competitors
When a non-compete agreement is not necessary to protect these interests and would restrict the employee’s ability to find gainful employment, the court will usually not enforce the non-compete agreement. Additionally, the duration of the non-compete agreement needs to be reasonable, generally less than a year. The geographic limitations must be limited in scope. A New York court is more likely to strike a non-compete agreement down when:
- The agreement covers an amount of time over one year after an employee leaves the job, or
- The agreement restricts an employee throughout the United States or covers areas beyond where the employer does business.
Are Non-Compete Agreements Enforceable When an Employee is Fired “Without Cause?”
New York courts will consider whether a non-compete agreement is enforceable when the employee is fired without cause. A recent decision in New York’s court of appeal ruled that when an employer is no longer willing to employ the individual and has fired the individual for no fault of their own, a non-compete agreement is unenforceable. In other words, if you were terminated from your position without cause, the non-compete clause may be considered unenforceable. As a result, you may be free to work for a competitor.
The Difference Between a Non-Compete and a Non-Solicitation Agreement
A non-compete agreement prohibits an employee from working for a competitor or opening a business that competes with the employer during employment. When a non-compete provision is added to a severance package, it will limit the employee from competing against the employer for a specific time frame after the employee no longer works for the employer.
On the contrary, a nonsolicitation agreement prohibits an employee from taking customers or other employees from their employer with them after the termination of their employment. Generally, non-solicitation agreements are in effect for a year or less.
Non-Compete Agreements Have Become More Popular
Non-compete agreements used to be rarely used in New York and throughout the country. These types of agreements were once limited to high-level executives who had access to company trade secrets or who developed specialized skills while employed by the company. However, over the past decade, companies have asked non-executives to sign non-compete agreements as a condition of employment.
As a result, employees at all levels may find themselves restricted by these agreements. As many as one in five employees may be bound by a non-compete clause, even if they are not working as an executive or have access to trade secrets. The overuse of non-compete agreements is creating a backlash against them, and courts are more likely than ever to void these agreements if they are unreasonably unfair to the employee.
Do I Have to Sign a Non-Compete Agreement?
Many employees are pressured into signing a non-compete agreement they do not want to sign. There is no law requiring you to sign a non-compete agreement. However, employers in New York are allowed to require you to sign a non-compete agreement before, during, or after you begin working for them. If you have been offered a non-compete agreement, you should discuss the agreement with an attorney before you sign it.
Knowing the terms of the agreement can help you decide whether signing the agreement is beneficial for you. If you have been told that you must sign the agreement to be hired or keep working for your employer, you may unintentionally sign a non-compete agreement. An attorney may be able to help you negotiate better terms for the non-compete agreement.
What if I Already Signed a Non-Compete Agreement?
If you have already signed a non-compete agreement, you may wonder about your legal options. If you are thinking of leaving your job, the conditions of your new employment could violate the terms of the non-compete agreement you signed. It is important to discuss your case with an attorney, especially if your employer has threatened to enforce a non-compete agreement against you. An attorney can review the agreement and help you understand whether your employer would likely successfully implement the non-competed against you in court.
Discuss Your Case with a Skilled New York Employment Attorney
Whether you are considering signing a non-compete agreement or have already signed one, HKM Employment Attorneys are here to help. We represent clients in New Paltz, New York, and the surrounding area in a wide range of employment cases. Contact HKM Employment Attorneys to schedule a case evaluation and learn how we can fight for you.
