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Got a non-compete agreement? It is often not enforceable.

Posted on May 20, 2015 by admin in blog news

NY Courts enforce non-competes only if:

  1. There is a legitimate business purpose, such as to protect a trade secret, and not general restriction on competition.
  2. Must be narrowly construed in terms of geography and time. Meaning geographical boundaries of the non-compete must be narrow. For example, a single locale, town or borough. Including one or more states, or entire US will probably not fly.
  3. Legitimately protect employer’s interests. These interests need to be defined. Otherwise, it will just be a simple restriction on competition. General restriction on competition is against public policy and cannot be legitimate.
  4. Not unreasonably burdensome to the employee. This is highly fact based. Obviously the longer the period of non-competition the more likely the agreement will be unenforceable.

NJ courts follow similar standards.

At times, a court may strike a non-compete provision entirely or may limit it in scope and application. The end result is heavily dependent on individual facts.

Having consideration in a non-compete is also very important, especially if the non-compete is being presented after the employment has already begun. In general, ongoing employment is sufficient consideration for both NY and NJ. Additionally, courts have enforced non-competes that require an employee to forfeit certain payouts or benefits as punishment for competition.

Kaplan Law Practice LLC specializes in all forms of contractual agreements, including non-compete, non-circumvention, service contracts, leases, licenses, operating agreements, bylaws and many more.

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