FindLaw KnowledgeBasePublished: 2012-07-17
Non-compete agreements are common for certain employees in highly competitive or creative industries, but they are not legal in all states. These contracts, which are a type of restrictive covenant, are legal and enforceable in New York, however. Non-compete agreements typically place restrictions on employees regarding the protection of a company’s trade secrets, customers and other forms of intellectual property. While there are both benefits and drawbacks to non-compete agreements for all parties involved, they should not be entered into lightly by anyone.
The main purpose employers require employees to sign non-compete agreements is to avoid having to compete with a former employee who knows their internal trade secrets. These contracts also generally prevent employees from courting a company’s customers and using their intellectual property for their personal gain for a certain period of time ― typically three years or less ― after termination. Non-compete agreements are common in industries like software development or engineering and in states like New York where they are enforced.
Employment Restrictions of Non-Compete Agreements
Non-compete agreements are typically viewed as one-sided contracts that restrict employees after leaving a particular company. They tend to cover the types of employment an employee can seek, who they can work for and in which locations they can work after employment is discontinued. For some employers, employees must sign non-compete agreements in order to accept an offer of employment. If a violation of the non-compete agreement occurs, the former employee may be sued or prevented from further employment by court order.
Benefits and Drawbacks of Non-Compete Agreements
While non-compete agreements are not designed to be particularly beneficial for employees, they can lead to valuable employment opportunities if employees choose to sign them. Non-compete agreements are important for some employers, because they secure future business and profits, but they can scare some employees away because of their legal repercussions, which may include compensatory damages and employment injunctions.
Employers should consider how to best draft non-compete agreements. According to New York law, non-compete agreements must be reasonable in time and geography and they cannot be overly burdensome to the employee or pose public harm. They must also be necessary to protect an employer’s legitimate business interests. If non-compete agreements do not reflect all four factors, they may be held unenforceable.
If you are an employer with questions about enforcing or drafting a non-compete agreement in New York, contact a New York employment attorney with experience drafting and litigating these contracts. You have the right to protect your business interests, so make sure you get the right help to draft solid non-compete agreements for your employees.