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May 16, 2023

New York Employment Law:  Navigating the Maze of Non-Compete and Non-Solicit Agreements in New York

New York Employment Law:  Navigating the Maze of Non-Compete and Non-Solicit Agreements in New York

Non-compete and non-solicit agreements have become a common practice among employers in the United States, including New York. These agreements are designed to protect employers' interests by limiting the ability of their employees to work for competitors or solicit their clients after leaving the company. However, the use of these agreements has come under increased scrutiny in recent years, with some arguing that they can limit competition and hinder employees' ability to find new jobs. In this article, we will discuss the current landscape of non-compete and non-solicit agreements in New York and what employers can do to ensure they are in compliance with the law.

Non-compete agreements are contracts that prevent employees from working for competitors for a certain period after leaving the company. These agreements typically include a geographic and time limitation. Non-solicit agreements, on the other hand, prohibit employees from soliciting their former employer's clients or customers for a certain period after leaving the company.

In New York, non-compete agreements are generally disfavored by the courts, but they are enforceable if they meet certain requirements. The New York State Senate amended Section 750 of the New York Labor Law to restrict the use of non-compete agreements for low-wage workers in 2019.  Under the law, employers cannot require employees who earn less than $75,000 per year to sign a non-compete agreement. The law also prohibits the use of non-compete agreements for employees who are terminated without cause or laid off.

Non-solicit agreements are generally more enforceable than non-compete agreements in New York. However, employers must ensure that these agreements are reasonable in scope and duration. For example, a non-solicit agreement that prevents an employee from soliciting any clients of the former employer, regardless of whether the employee had prior contact with them, may be considered overly broad.

Employers in New York can take several steps to ensure their non-compete and non-solicit agreements are enforceable. First, employers should ensure that these agreements are reasonable in scope and duration. They should also provide consideration to employees in exchange for signing the agreements, such as a signing bonus or a promotion. Employers should also be careful not to include overly broad or vague language in these agreements.

Recent cases in New York have highlighted the importance of ensuring that non-compete and non-solicit agreements are reasonable in scope and duration. In one case, a New York court invalidated a non-compete agreement that prevented an employee from working for any competitor in the United States for a period of two years. The court found that this agreement was overly broad and not reasonable.

In another case, a New York court invalidated a non-solicit agreement that prevented an employee from soliciting any clients of the former employer for a period of two years. The court found that this agreement was overly broad and not reasonable because it did not distinguish between clients that the employee had prior contact with and those that the employee had no prior relationship with.

In conclusion, non-compete and non-solicit agreements are common practices among employers in New York, but they must be reasonable in scope and duration to be enforceable. 

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