Today, it is common for employees to be required to sign a non-compete agreement as a condition of their employment. Although non-compete agreements are designed to protect an employer’s confidential business information, these agreements can also unfairly limit future career opportunities for employees and expose them to legal liabilities. If you have questions about whether or not you should sign a non-compete or whether an existing non-compete agreement is enforceable, you should consult a knowledgeable employment law attorney.
At Lipsky Lowe LLP, our legal team is dedicated to protecting employees from overly broad and restrictive non-compete agreements. While it is common for many individuals to believe that they are not bound by the terms of a non-compete once they leave their place of employment, this is not the case. An employer can file a lawsuit preventing you from violating the non-compete agreement and even seek damages. When you work with us, you can trust us to make sure your rights are protected.
What is a Non-Compete Agreement?
A non-compete agreement, which is also sometimes called a restrictive covenant, is one that prohibits an employee from working for an employer’s competitors within a geographic area for a set period of time after the employment relationship ends, typically ranging from 6 months to 2 years. Additionally, the employee agrees not to start a company that competes with the employer’s business or to poach the employer’s clients or customers.
While an employee cannot be forced to sign a non-compete agreement, it is typically a condition of being hired by or continuing to work for an employer. Non-compete agreements generally become effective after the employee has left his or her place of employment and are designed to protect the employer from being exploited by an ex-employee.
When is a non-compete agreement legally binding?
For non-compete agreements to be considered enforceable by the courts in New York, the agreement must be reasonable concerning the time period and geographical covered. The employer must also have a legitimate interest it is trying to protect. Additionally, the agreement must provide the employee with a benefit in exchange for signing it and not prevent him or her from doing a different type of work. That benefit, also called consideration, is met by the employer offering an employee a raise, a promotion or even making that employee’s continued employment conditioned upon signing the non-compete agreement. If the court determines that a non-compete agreement is overly broad or punishes the employee, it may narrow the scope and duration of the agreement or refuse to enforce it.
On the other hand, a non-compete agreement that is reasonable in time and geographic scope will be enforced to prevent the disclosure of trade secrets or confidential business information by the employee as well as in situations where the employee’s role is considered unique or special. Ultimately, the court will look to balance the need to protect the employer’s legitimate business interests with the employee’s need to continue making a living.
A non-compete will generally be unenforceable if the company fires the employee without cause. Under these circumstances, courts consider it fundamentally unfair for an employer to fire an employee and then try to saddle them with these post-employment restrictions.
What are the consequences of violating a non-compete agreements?
If you take a position with a competitor of an employer with whom you have a non-compete agreement, your employer may file a lawsuit against you and/or your new employer seeking to enforce the agreement. The court may issue an injunction or restraining order which can prevent you from working at your new job. Your ex-employer can also seek damages for losses arising from your violation of the non-compete agreement (e.g. lost profits from customers, the loss of confidential business information or trade secrets). It is worth noting, however, that the court will not enforce a non-compete agreement if you were involuntarily terminated.
Contact Our NYC Non-Compete Agreements Attorney
Before you sign a non-compete agreement, you should speak to our experienced employment law attorneys. We will review the agreement to make sure that it is not overly restrictive and negotiate with your employer if necessary to arrive at terms more favorable to you. If you are already working under a non-compete and considering leaving your place of employment, it may also be possible to obtain a letter from your employer releasing you from the terms of the agreement. We also regularly litigate these issues. Employers should be aware that we also represent businesses regarding the preparation of employment agreements to ensure that their legitimate business interests are protected by legally enforceable agreements. Please contact our office today to speak with our employment law attorneys.