NY Courts enforce non-competes only if:
- There is a legitimate business purpose, such as to protect a trade secret, and not general restriction on competition.
- 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.
- 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.
- 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.