New York Non-Compete Agreement Laws: What You Need to Know
Non-compete agreements are common in many industries. They are designed to protect businesses by prohibiting former employees from competing against them for a certain period of time after leaving the company. However, these agreements can often be complicated, and the laws governing them can vary significantly from state to state. In New York, the laws around non-compete agreements are especially strict.
What is a Non-Compete Agreement?
A non-compete agreement, also known as a non-compete clause or simply a non-compete, is a legal agreement between an employer and an employee. The purpose of a non-compete is to prevent the employee from working for a competitor or starting a competing business for a certain period of time after leaving the company.
Non-compete agreements typically specify the length of the restriction, the geographical area where the restriction applies, and the types of businesses or activities that the employee is prohibited from engaging in. In some cases, the agreement may also include a provision that restricts the employee from soliciting the company`s clients or customers.
New York Non-Compete Agreement Laws
New York has some of the strictest non-compete agreement laws in the country. In general, New York courts will not enforce non-competes unless they meet certain criteria. Here are some key things you should know:
1. Non-competes must be reasonable in scope and duration.
In order for a non-compete agreement to be enforceable in New York, it must be reasonable in scope and duration. This means that the restriction cannot be too broad or too long. For example, a non-compete that prohibits an employee from working for any competing business in the entire state of New York for 10 years would likely be deemed unenforceable.
2. Non-competes must protect a legitimate business interest.
To be enforceable, a non-compete agreement must protect a legitimate business interest, such as a company`s trade secrets, customer relationships, or confidential information. New York courts will not enforce non-competes that are designed to prevent ordinary competition.
3. Non-competes are not enforceable for low-wage employees.
New York law prohibits non-compete agreements for employees who earn less than $900 per week. This means that employees who make less than $46,800 annually cannot be subject to a non-compete.
4. Non-competes must be signed at the beginning of employment.
Non-compete agreements must be signed at the beginning of employment in order to be enforceable. If an employee is required to sign a non-compete after they have already started working, the agreement may be considered invalid.
5. Non-competes must be supported by consideration.
In order for a non-compete agreement to be enforceable, the employee must receive something of value in exchange for signing it. This is known as consideration. In many cases, the job itself is considered sufficient consideration. However, if an employee signs a non-compete after they have already been working for the company for a while, they may need to receive additional consideration, such as a bonus or a promotion.
Conclusion
If you are an employer in New York, it is important to understand the state`s non-compete agreement laws. Non-competes can be a valuable tool for protecting your business, but they must be reasonable in scope and duration, protect a legitimate business interest, and be signed at the beginning of employment. If you are an employee who has been asked to sign a non-compete, it is important to read the agreement carefully and understand your rights. If you have any questions or concerns, consider consulting with an attorney who specializes in employment law.