What Do You Need to Know About Non-Compete Agreements?

What is a non-compete agreement and how does it work?

Non-compete agreements were created to protect businesses from losing information that was vital to their bottom line if employees took jobs with competing companies.

Businesses knew there was a risk when executives with information related to trade secrets and other “insider info” were lured away with attractive job offers from competing companies. In many cases, they were offered jobs just to get access to the information they had. Non-compete agreements were created to prevent this from happening.

At first glance, non-compete agreements make sense. Why wouldn’t a business want to prevent sensitive information from being shared with competitors?

However, many businesses took advantage of the idea of non-competes, expanding them far beyond their original intention and creating an environment in which employees were hurt for no justifiable reason. Many forced non-compete agreements on rank and file employees – those who have very little, if any, access to sensitive information and should not be prevented from working elsewhere in their industry.

When used abusively, non-compete agreements can severely damage a worker’s ability to be upwardly mobile in his or her chosen field.

There have even been instances in which employers sued low-level employees, including janitorial staff, for accepting jobs with competitors. These are non-exempt, hourly employees such as dog walkers, warehouse employees, and kitchen workers, none of whom are privy to secrets within their company, but their former employers prevented them from finding work for which they were qualified.

The original intent of non-compete agreements eventually expanded well beyond any correct or reasonable interpretation and has crossed the line into being severely restrictive and punitive.

Many people familiar with how non-compete agreements are being used in today’s workforce believe that lawmakers are not doing enough to restrict agreements to their originally intended purpose. What non-competes can and cannot govern varies from state to state, including what employees within an organization can be asked to sign and whether they can be enforced against employees who are laid off or terminated without cause.

Non-Compete Agreements in New York

In New York, non-compete agreements and any other restrictive covenants in employment contracts are discouraged and difficult to enforce unless there are very specific circumstances.

Courts in the state tend to enforce non-compete clauses only when:

• It is reasonably limited in scope and duration
• Restrictions do not go beyond protecting the employer’s legitimate interest
• It is not harmful to the general public
• It is not unreasonably burdensome to the employee

Even in those circumstances, employers have to prove the non-compete agreement was not used solely to prevent competition and must show it is necessary to prevent the use or disclosure of trade secrets or the revealing of confidential customer information or relationships.

Furthermore, the courts have upheld that a reasonable time frame for a non-compete agreement is six months or less.

Have You Been Asked to Sign a Non-Compete Agreement?

So what should you do if you have been offered a new job and you are asked to sign a non-compete agreement? What if your current employer comes to you and asks that you sign a non-compete agreement for a job you’ve been doing for months or years?

If you believe your job might be at risk if you choose not to sign, it’s important to speak to a lawyer.

Employment agreements tend to be complicated, with or without non-compete clauses. Agreeing to the addition of a non-compete restriction could put your livelihood in jeopardy. You should know and understand the content of the clause and its potential consequences.

You can find a list of frequently asked questions about non-compete agreements in New York here.

If you have questions about non-compete agreements or you are concerned about what you can and cannot do if you have signed a non-compete agreement, contact New York Employment Lawyers Borrelli & Associates, P.L.L.C. to schedule a free consultation.