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Non-compete agreements have become increasingly common in almost all types of business. They are used to protect the employer’s intellectual property and also to prevent former employees from sharing customer lists and similar information with competitors. Occasionally, the former employee will attempt to have a non-compete agreement declared unenforceable. One such case is unfolding in the Federal District Court in New York.
When a regional executive vice president resigned from the Macy’s department store chain and then accepted a job with Burlington, another large clothing retailer, Macy’s sued her, claiming that she signed a non-compete agreement that prevented her from accepting employment with a competitor for a period of two years. The employee has responded by asking the federal judge in charge of the case to dismiss Macy’s lawsuit on the ground that the non-compete is too broad and unreasonable in its scope and therefore unenforceable. The non-compete agreement apparently has no geographic limits that might reduce its scope. The employee is also arguing that the contract is unreasonable because it seeks to impose a blanket limitation on working in a “vast and varied industry.”
Non-compete agreements can be difficult to enforce in New York courts, especially if the employee is dismissed without cause. Courts examine the circumstances under which the employment was terminated, and the geographic and time limits in the agreement. If the scope is too broad or if enforcement would be unfair, the courts will generally refuse to enforce the agreement.
Anyone who has been asked by an employer to sign a non-compete agreement may wish to consider consulting an attorney who advises clients in employment litigation. A knowledgeable attorney may be able to offer an opinion on the enforceability of the agreement in different circumstances. Persons who have already signed a non-compete agreement may also benefit from such a consultation if they are thinking of changing jobs.
Source: Women’s Wear Daily, “Macy’s Faces Legal Action Over ‘Unreasonable’ Non-compete Contract,” Kali Hays, April 20, 2017
