New York Noncompete Agreement: What's Included and Enforceability

Quick Facts — Noncompete Agreement Lawyers

Is a Non-Compete Agreement Enforceable in New York?

Yes. New York allows employers to enforce non-compete agreements against employees to protect their legitimate business interests. To be enforceable in New York, a non-compete agreement must pass a test that was established by the Supreme Court of New York called the three-prong test:

  1. Protectable interest. The non-compete agreement must protect a legitimate business interest and can be no more restrictive than necessary to protect this interest.
  2. Undue hardship. The employee cannot face undue hardship as a result of the restrictions of the non-compete agreement.
  3. Public policy. The non-compete agreement cannot be injurious to the public.

An example of a non-compete agreement that is injurious to the public would be an agreement that prohibits a doctor from practicing medicine in a certain area which would limit the public’s ability to select certain doctors for treatment.

What is a Protectable Business Interest in a New York Non-Compete Agreement?

If a non-compete agreement doesn’t protect a legitimate business interest, it will be unenforceable. The New York Supreme Court has determined that the following interests qualify as “protectible business interests”:

  • Trade secrets
  • Confidential customer information
  • Employer’s client base or client lists

In addition, a non-compete agreement can be used to protect an employer from irreparable harm where an employee’s services are unique.

How Long Does a New York Non-Compete Agreement Last?

The Supreme Court of New York has determined that 2 years is a reasonable length of time for a non-compete agreement to last. In addition, the courts have recognized that five years is reasonable for a non-compete agreement that is used when selling a business.

How Do You Get Around a Non-Compete Agreement in New York?

If an employee wants to get around a non-compete agreement in New York, there are a couple of ways this can be accomplished.

  1. The legitimate interest test. Non-compete agreements in New York must serve the purpose of protecting a legitimate business interest. To get out of a non-compete agreement, an employee can show that the contract is not protecting a legitimate interest.
  2. Breach of contract. Most non-compete agreements are part of a larger employment contract. If an employer has breached any part of the employment contract, it will be difficult to enforce the non-compete agreement.
  3. Lack of specific language. To enforce a non-compete agreement, the contract terms need to be specific and cannot be overly broad. If an employee is prohibited from working for a competitor, it must state in what capacity. A non-compete agreement cannot stop an employee for working for a competitor in a different type of job. This is often called the “janitor rule” because courts use the example that a CEO of one company cannot be prohibited from being employed as a janitor at a competing company.
  4. Lack of competition. The purpose of a non-compete agreement is to prevent unfair competition to an employer’s business. If an employee can prove that they are not in competition with the employer, a non-compete agreement cannot be enforced.

What Voids a New York Non-Compete Agreement?

There are several ways that a New York non-compete agreement can be determined void by a court. These reasons include:

  1. The employee was fired without cause.
  2. The terms of the contract impose undue hardship on the employee and their ability to find work.
  3. An employee’s job skills are rare and necessary for public health.
  4. The duration is too long or the geographic boundary is too large.

If any of these conditions apply to a non-compete agreement, it may be deemed void by the court.

Frequently Asked Questions

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Terry Brennan is an experienced corporate, intellectual property and emerging company transactions attorney who has been a partner at two national Wall Street law firms and a trusted corporate counsel. He focuses on providing practical, cost-efficient and creative legal advice to entrepreneurs, established enterprises and investors for business, corporate finance, intellectual property and technology transactions. As a partner at prominent law firms, Terry's work centered around financing, mergers and acquisitions, joint ventures, securities transactions, outsourcing and structuring of business entities to protect, license, finance and commercialize technology, manufacturing, digital media, intellectual property, entertainment and financial assets. As the General Counsel of IBAX Healthcare Systems, Terry was responsible for all legal and related business matters including health information systems licensing agreements, merger and acquisitions, product development and regulatory issues, contract administr

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Employment

Noncompete Agreement

New Jersey

Asked on Apr 15, 2021

Can I work for a competitor with my current noncompete?

I have ended my non competent consulting agreement with my current employee and I have an offer to work as an employer “not as consultant” with a competitor company to my privious employees so can I work as an employee without any problem? The consultant agreement says the following: Under any circumstances the consultant shall not engage directly or indirectly either as a principal agent , consultant,stock holder , partner or in any other capacity whatsoever have any other relationship with any business which compete with the company in USA.

Jane C.

Answered Apr 16, 2021

I suggest that you have an attorney review the entire agreement. It is hard to comment reading a paragraph taken out of context. From the limited facts you present, it seems that you cannot accept this job offer without violating the terms of the non-compete. Disclaimer - This information is provided for general informational purposes only. No information contained in this post should be construed as legal advice and does not establish an attorney-client relationship.

Read 2 attorney answers>

Employee Rights

Noncompete Agreement

California

Asked on Sep 12, 2022

i work for a employer from illinois ,however i am in california. My contract has non compete clause. will that be enforceable

My employer has placed me in a position thru another vendor. My employer contract with that vendor is ending. So vendor contacted me. However I am in contract with my employer for 1 year contract.

Christopher M.

Answered Sep 13, 2022

Short answer: Probably no, non-compete and non-solicitation clauses are not usually enforceable on an employee in California. Long Answer: Regardless of the choice of law provision in your contract, if an enforcement action is brought against you in California, the California courts will dismiss it as it goes against the "public policy of the state" unless your employer can make a really compelling case. Most states respect the stated public policy of other states when deciding matters against their citizens, so even if the case was brought in another states courts your soon to be former employer would probably be powerless to get a judgement enforcing your non-compete.

Read 1 attorney answer>

Employer

Noncompete Agreement

Connecticut

Asked on Jul 13, 2023

Can a noncompete agreement be waived?

I am a small business owner in the retail industry and I am looking to hire a new employee. The employee has a noncompete agreement with their previous employer that I am concerned about. I want to know if it's possible for the agreement to be waived so that I can be sure I'm making the right decision in hiring this employee.

Thomas L.

Answered Jul 21, 2023

Yes, the parties to contracts can always agree to amendments and waivers. However, the former employer may have no interest in waiving the contract in this particular situation.

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Business

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Asked on Jul 12, 2023

Noncompete agreement and business partners?

I am a business owner who has recently acquired a new partner. We are in the process of drafting a Noncompete Agreement to ensure that neither of us will compete against each other in the same market. We are looking for advice on what should be included in the agreement and how it should be enforced.

Daniel D.

Answered Aug 4, 2023

The one thing to make sure with noncompete agreements is that it is reasonable in terms of duration and the area you cannot compete in. Courts use a reasonableness test to determine whether a noncompete agreement is valid. If provisions are deemed to be unreasonable and fail the test, they could be altered or struck out of the agreement.

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Employee Rights

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Asked on Dec 5, 2024

Can my employer enforce a non-compete agreement I signed even though I was not provided any additional compensation or benefits in return?

I recently started a new job and was asked to sign a non-compete agreement as a condition of employment. However, I just found out from a colleague that my employer has been enforcing the non-compete agreement against former employees and preventing them from working in similar roles at competing companies. I am concerned because I was not given any additional compensation or benefits in exchange for signing the agreement, and I believe it may be unfair and potentially unenforceable. Can my employer legally enforce the non-compete agreement even though I did not receive any additional compensation or benefits in return?

Damien B.

Answered Dec 6, 2024

Hello! Generally, New York courts require that a non-compete agreement be supported by adequate consideration. If the agreement is signed at the beginning of employment, the job itself may serve as adequate consideration. However, if the non-compete is signed after employment begins, the employer may need to offer additional benefits, such as a raise or promotion, for the agreement to be enforceable. There are other defenses against enforcement. For a non-compete agreement to be enforceable, it must be reasonable in terms of duration, geographic scope, and the scope of activities it restricts. A court will evaluate whether the agreement is necessary to protect the employer’s legitimate business interests, such as confidential information or customer relationships. If not, a court could rule the noncompete is not enforceable.

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