Too often, employees just sign their pre-employment paperwork without reading it carefully. Perhaps it is because there is so much paperwork, or maybe it is because the employee is so giddy with happiness about having a stable job with an employment contract. Even if you make sure to go over all the parts about salary and benefits with a fine-toothed comb, you might skim the last few pages, in a hurry to get to the signature; you might assume that those provisions near the end of the contract are just boring boilerplate and do not affect the substance of the contract. Even though non-compete clauses could be lurking in the fine print of your employment contract and you might not have even noticed that your contract had a non-compete provision when you signed it, the non-compete provision could cause a dispute between you and your employer even after your job has ended. A New York City non-competes lawyer can help you avoid signing non-compete agreements that could come back to bite you and can also help you resolve disputes that arise from a non-compete agreement you have already signed.
What is a New York City Non-Compete Agreement?
In the context of employment law, a non-compete agreement is an agreement where an employer promises not to engage in activities that compete directly with the employer’s business activities, usually by working for a direct competitor of the employer or setting up a new business similar to the employer’s business. Sometimes a non-compete agreement is simply an article in an employment contract. Other times, employers ask you to sign a separate non-compete agreement, after you have already signed the employment contract and started working.
You might wonder whether it is fair for an employer to dictate what jobs you can and cannot have after you leave your current job, and the answer is, it depends. The best-case scenario is that the employer only temporarily prevents you from applying to a limited set of jobs, so that even if you copy the ideas you learned at your previous job, your employer has already gotten enough of a head start with them that you do not pose unfair competition. The worst-case scenario is a dystopia where work controls your every move, even after you quit your job. A New York City non-compete agreement lawyer can help you decide whether the non-compete agreement that your employer is asking you to sign is fair.
Are Non-Compete Agreements Legal in New York?
New York has robust laws to protect workers from unfair non-compete agreements. The courts of New York do not consider a non-compete agreement enforceable unless it satisfies the following four criteria:
- It is difficult for the employer to protect its own interests if the employee does not sign the non-compete agreement
- Abiding by the terms of the agreement would not impose an unfair hardship on the employee
- The agreement does not harm the public
- There are reasonable limits on the time and geographic area to which the agreement applies
For example, assume that, when you get a job as a cook at a Korean fried chicken restaurant that only has one location, the employer asks you to sign a non-compete whereby you promise that, for one year beginning on your last day of work with the employer, you will not open a restaurant within a five-mile radius of the employer’s restaurant that serves Korean cuisine and where more than 25% of the entrees on the menu are fried chicken. This agreement does not impose an unfair hardship on you, because you are free to open your own Korean fried chicken restaurant in another borough as soon as you quit your current job. You are also free to open a restaurant right next door to your employer as long as it serves pizza or sushi or vegan pub grub or Korean barbecue, anything else except Korean fried chicken.
Court Decisions About Non-Competes in New York Case Law
The courts of New York have handed down rulings about the limits of non-compete agreements between employers and employees. These are some notable cases:
- The court required the sandwich restaurant chain Jimmy John’s to stop using noncompete agreements that required employees to wait at least a year after leaving their jobs before they could apply to work at another Jimmy John’s location. These agreements also required employees to wait two years before working at a non-Jimmy John’s restaurant where 10% or more of revenues came from sandwiches.
- Before the court issued a ruling making it stop, the website Law360 used to make its writers sign non-compete agreements that made them wait a year before working for another law-related journalism site.
- WeWork used to ask employees who worked as cleaners to promise not to work for any other cleaning company for a certain period of time after quitting WeWork.
These examples show that, if left to their own devices, employers will require employees to sign non-compete agreements that effectively require them to stop practicing their occupations. Most people apply for jobs in areas where they already have experience; someone who previously worked at Jimmy John’s will have an easier time getting a new job at another fast-food restaurant than they will at a different kind of job. Likewise, news websites want to hire people with journalism experience, and cleaning companies want to hire people with cleaning experience. In 2021, President Biden signed an executive order urging the Federal Trade Commission (FTC) to impose penalties on companies that pressure employees to sign overly restrictive non-compete agreements. If you have been working at your job for two years or more, it is possible that you have agreed to non-compete provisions that are no longer legally enforceable.
Contact HKM Employment Attorneys, LLP About Non-Compete Agreements in New York City
The employment lawyers at HKM Employment Attorneys, LLP can help you resolve disputes with your current or former employer related to non-compete agreements. Contact the employment lawyers at HKM Employment Attorneys LLP in New York, New York to set up a consultation.