Non-Compete in New York: Is Payment Required to Make Agreement Enforceable?

There are many factors that are used to determine whether a non-compete is enforceable.  Laws regarding the enforceability of non-competes vary by state, but courts generally weigh several factors in making the determination, including (a) whether the non-compete is reasonable in time and geography, (b) whether the employee was terminated without cause, (c) whether the employee had access to the employer’s secrets, (d) whether the non-compete is necessary to protect the employer’s interest and (e) whether the employee may have been coerced  into signing it.  Under general contract law principles, each side must get something of value in order for a contract to be enforceable (this requirement is referred to as “consideration”). In some states, an employee must receive actual payment in order to meet the consideration requirement for a non-compete.  Other states, including New York (and New Jersey), view continued employment to be sufficient consideration to make a non-compete enforceable and actual payment is not required. If you have any questions about your non-compete or non-competition agreement, please contact Granovsky & Sundaresh PLLC.