Noncompete Agreements In New York State
Frequently Asked Questions
A noncompete agreement (“noncompete”) prohibits an employee from working for a competitor or opening a competing business, typically for a certain period of time after an employee leaves a job. A noncompete may be one section of an employment contract or a standalone contract that an employee signs before or after employment begins.
In most industries, some noncompete agreements are legal and can be enforced. Whether a specific noncompete is legal and enforceable depends on a court's application of the common law. In New York, a noncompete is legal and enforceable only if it does all of the following:
- It is necessary to protect the employer’s legitimate interests. This can include protecting theemployer’s trade secrets and confidential information. It can also include preventing employees from going to a competitor with specialized skills they gained on the job.
- It does not put an unnecessary hardship on the employee.
- It does not harm the public.
- It is reasonable in time period and geographic scope.
A noncompete’s restrictions must not be greater than needed to protect the employer’s legitimate interests.
To determine if a noncompete is enforceable, courts consider the employee’s job duties, the employer’s business interest, and the language of the agreement. A court will not enforce a noncompete unless it determines that the noncompete meets these four conditions.
In general, if a court finds that parts of a noncompete are unreasonable, it may invalidate the agreement entirely. Or the court may enforce the agreement for a shorter time or in a smaller area.
In addition, a court may require an employee to comply with some parts of a noncompete, even if other parts are unreasonable. For example, the court may decide that the employee must agree not to work for a competitor for a certain number of years, or within a certain geographic area.
There is one industry that cannot use noncompetes for most workers: broadcast employers. Under New York law, broadcast employers cannot enforce noncompete restrictions against former employees. The law applies to employees who work both on or off the air in television, radio, cable, Internet, and satellite-based broadcasting services. The law also applies to any other entity that provides broadcasting services, such as news, weather, traffic, sports, or entertainment reports or programming. However, broadcast employers are allowed to use noncompetes for employees who work in management.
No law requires you to sign a noncompete, but an employer is allowed to ask you to sign one before or after you start work. Read any noncompete carefully: It is easy to overlook the terms if you are told you must sign it to get or keep a job. In this type of situation, you might find yourself signing an unenforceable noncompete without meaning to. In this case, you may be able to negotiate some terms. Consult a labor lawyer if you are unsure of your rights.
Depending upon its terms, a noncompete may limit your ability to accept a new job for a certain period of time within a certain geographic area. If a noncompete is too restrictive, then it may be difficult to find new work with higher wages or better job opportunities.
An employer can file a lawsuit and ask a court to enforce the noncompete and require the employee to follow its terms. Some employers may send a letter to the employee or to the employee’s new employer threatening to file a lawsuit to discourage employees from taking a new job.
Before signing a noncompete
- Before accepting a new job, ask the employer if you will have to sign a noncompete.
2. Before signing, make sure you read and understand any document that an employer asks you to sign.
3. Remember that a noncompete is a contract and that you can try to negotiate its terms.
4. Consider these questions before signing:
- What businesses are considered competitors? A noncompete may not be enforceable if the definition of a competitor is too broad or prevents you from working in an entire sector or industry.
- How long does the noncompete period last? Noncompetes should be limited in time.
- What geographic area does it cover? Is the geographic scope so large that you might have to move to get a job with another employer in the industry?
- Are you getting anything in exchange for signing the noncompete? For example, some employers provide a bonus or specialized training, guarantee employment for a certain time, or provide payment for some or all of the noncompete period in exchange for signing a noncompete.
- Can you have a lawyer review the language and advise you on its potential consequences or negotiate with the employer on your behalf?
If you have signed a noncompete and are thinking of leaving your job, consider whether your new employment would violate the terms of your agreement. Seek legal advice if you are not sure.
If your employer threatens to enforce a noncompete agreement against you, consider contacting an attorney to determine whether the employer would be successful in court or to consider bringing your own lawsuit to challenge the noncompete as unenforceable.
Ending overly broad noncompetes
The Attorney General has investigated suspected misuse of noncompetes for rank-and-file employees, and we have reached agreements with employers to stop using noncompetes for employees who did not have access to trade secrets or confidential information, including:
- Valvoline, a nationwide company that operates corporate-owned instant oil change facilities, agreed to stop using noncompetes for all hourly employees working in the automotive lubricants or quick-lube business. These noncompetes barred workers, for one year after leaving Valvoline, from seeking employment within the industry at any location within 100 miles of their former Valvoline worksite.
- The sandwich chain Jimmy John’s agreed to stop using noncompetes for its sandwich makers. The noncompetes had prohibited these workers from working at another Jimmy John’s location for one year. The noncompetes also prevented the workers, for two years, from working for any other restaurant that earns more than 10% of its revenue from sandwiches and that was within two miles of a Jimmy John’s location.
- The legal news website Law360 agreed to stop using noncompetes for editorial employees. The noncompetes had prohibited these workers from working, for one year after their Law360 employment ended, for any media outlet that provides legal news.
- The co-working company We Work agreed to stop using noncompetes for cleaners and many other rank-and-file employees. The noncompetes had prohibited these employees, for one year after their employment ended, from working for any competitor in any of the dozens of cities in the U.S. or other countries where WeWork operates.
- The national medical information services company EMSI stopped using a noncompete that prevented phlebotomists and other rank-and-file employees from working for a competitor.
- The healthcare staffing company Supplemental Health Care agreed to stop using noncompetes for many of its employees in administrative, human resources, and payroll job titles. The company also agreed to greatly reduce the geographic area restriction for employees who were still affected by the noncompete.
- Valvoline, a nationwide company that operates corporate-owned instant oil change facilities, agreed to stop using noncompetes for all hourly employees working in the automotive lubricants or quick-lube business. These noncompetes barred workers, for one year after leaving Valvoline, from seeking employment within the industry at any location within 100 miles of their former Valvoline worksite.