As the employment market begins to heat up, many New Yorkers are taking advantage by entering into employment relationships with different employers. A common requirement from employers is a non-compete agreement. Many employers require new employees to sign a non-compete agreement before being hired. But what is a non-compete agreement? How do courts enforce them?
In today's job market, employees making frequent job changes, as well as changing companies, has become commonplace. Non compete agreement are typically used to protect employers from having trade secrets exposed when an employee leaves the company. But how enforceable are these agreements? An employer can have a better chance of protecting themselves and their business by creating non compete agreements that are more specific and reasonable.
Many employees in Manhattan, and even some employers, may assume that most employment arrangements are governed by employment contracts in addition to employment law. The reality is that most employment relationships can be categorized as employment "at will," meaning that the employee can be terminated for any reason not expressly prohibited by employment law or civil rights law. However, some employment relationships are governed by an employment contract, and it is common for these contracts to limit the power of the employer to fire the employee.
Many contracts in the modern business world contain clauses requiring that disputes about the contract must be submitted to binding arbitration. When the parties to the arbitration proceeding are both large, well-funded corporations, the arrangement is usually deemed to be fair to both parties. When, however, the clause appears in an employment contract, the parties may be manifestly unequal, a large corporation versus one or more employees. Recently, lawyers who engage in employee representation have begun to push back against such provisions.
With your business up and running, you were likely ecstatic about its success and the capital you invested in it. However, you have reached your goals, and your business is becoming profitable. In fact, you and your partner may be discussing expanding your staff. This introduces new cause for anxiety.
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.
Non-compete agreements are often used by employers in New York and elsewhere to ensure that former employees cannot accept employment from competitors and then solicit the former firm's customers. A recent decision by the Appellate Division of the New York Supreme Court now casts doubt on whether such agreements can be enforced against employees who are terminated without cause. The widespread use of non-compete agreements makes this case a critical issue in employee and employer representation.
Like many other states in this country, New York adheres to the "employment at-will" doctrine. The employment at-will doctrine provides an employer can fire a New York employee, for any reason or for no reason at all, unless there is some other law or contractual provision that prohibits the employer from doing so.
According to the Attorney General of New York, New York law does not favor non-compete agreements and only allows employers to use them in very limited circumstances. The Attorney General stated the government's position on non-competes while announcing a settlement agreement between the states and a media outlet that was finalized last summer.
If you are in discussions with a potential employer regarding a employment contract, it is important to come prepared. This means not only understanding what is included in a contract being offered, but also understanding options as to what else may be included or excluded in the contract.