Arthur R. Lehman, L.L.C.

Am I bound by a non-competition agreement?

Last week's post on the New York City Business and Commercial Law Blog introduced New York employees to the world of restrictive covenants and outlined what a solicitation agreement is. This week, we will look at another type of covenant: a non-competition agreement.

It is more and more likely that when signing an employment agreement you signed a non-compete provision. This clause prevents employees from working in a similar job in a specific radius of the job they currently work at for a specific amount of time. For example, it could prohibit a sandwich maker from working in any other sandwich shop for three years in a three mile radius. New Yorkers may wonder if they have ever come across this type of clause in their contracts before, and may be surprised to learn that one in four employees have signed such an agreement once in their lifetime.

In fact, according to a recent study, 12.3 percent of workers are currently bound by a non-compete agreement. Research conducted by two economists found that non-compete clauses are more likely used when hiring workers in information fields such as architecture or engineering. Generally, the research concluded, jobs with higher salaries are more likely to have non-compete clauses in their hiring contracts.

In addition to this, one paper also demonstrated that where a non-compete clause was included in a hiring contract employees received a lot of job related training, which may be one of the reasons they signed the clause in the first place. Companies invest in their employees and one of the incentives to invest is to get them to sign the contract in the first place.

Few people with non-compete clauses in their contracts ever question them, assuming they are non-negotiable. This does not always have to be the case, though, as with effective employee representation one may be able to negotiate to get the agreement, perhaps getting its terms changed. Nonetheless, it is important to understand the implications of signing such a clause before doing so, and an experienced professional may be able to provide guidance in the matter.

Source: Washington Post, "The rise of the non compete agreement, from tech workers to sandwich makers," Lydia DePillis, Feb. 21, 2015

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