So, You Have A Non-Compete With Your Employer, What Does This Really Mean?
In New York, if your current employment ends, your non-compete usually cannot completely prevent you from working in your selected field and losing your livelihood. This means that New York Courts will try to balance your employer’s legitimate interests in protecting itself with your ability to continue to work.[1] Usually non-competes longer than two (2) years are not enforced. Also, if the geographic scope of the non-compete is too broad, i.e., “anywhere in the world,” it is less likely to applied in full.
What Types of Limitations Are Courts Most Likely to Enforce?
Courts will enforce a non-compete against an employee whose services are considered special, unique, or extraordinary.[2] For example, actors and other performers may fit into this category, but this is not true of most employees. Where the non-compete provides for “garden leave” and pays you during the prohibited competition period, it may be easier for the employer to enforce. In addition, confidentiality agreements and non-disclosure agreements are more likely to be enforced than non-competition agreements. This means you cannot walk away from your employer and take its confidential methods of doing business or processes with you to a new employer. Similarly, agreements prohibiting you from luring both clients and personnel away from the employer—called “non-solicit” agreements—are more likely than non-competes to be deemed reasonable. The basis for this is that the employer has invested its financial resources to assist you in securing clients, so you cannot just walk away with the clients.
Does This Mean I Cannot Take My Clients With Me to a New Employer?
It depends. If you brought a client with you to your current employer, you can usually take that client with you to your next employer. The answer will also turn on the terms of your non-solicit agreement and the industry you are in. In the financial field, for example, clients can usually choose their representatives. However, the client may still need to initiate the request to continue to be serviced by you, and you may be limited in whether you can affirmatively contact prior clients, including sending an announcement that you are going to a new employer. In other situations, where the Court determines that an employer has not contributed meaningfully to the generation of goodwill,[3] so long as the client contact information is not considered a trade secret or confidential information and is publicly available or easily recalled, you may be able to reach out to former clients.[4] Absent this balancing of interests, employees would be virtual hostage to their employers.[5]
I am Still Not Sure What I Can Do. . . .
These situations are highly fact-sensitive. In most circumstances, we can review your relevant documents and assess your situation for a flat fee to let you know where you stand. If you would like to discuss your situation with us, please feel free to call or e-mail us at any time. You will be on the phone with an attorney within 24 hours
[1] BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 389 (1999)
[2] Chernoff Diamond & Co. v Fitzmaurice, Inc., 234 AD2d 200, 201-202 (1st Dept 1996).
[3] Kanan, Corbin, Schupak & Aronow, Inc. v. FD Int’l, Ltd., 8 Misc.3d 412, 422 (Sup. Ct. N.Y. Co. 2005).
[4] Chernoff Diamond & Co. v Fitzmaurice, Inc., 234 AD2d 200, 201-202 (1st Dept 1996).
[5] Reed, Roberts Assocs., Inc. v Strauman, 40 NY2d 303, 309 (1976).