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Navigating issues related to restrictive covenants in the employment relationship, P.2

Previously, we began looking at the topic of restrictive covenants in New York, and specifically at noncompete agreements. As we noted, the general rule with noncompete agreements in New York is that they must be reasonable as to both duration and geographical area.

Additionally, to be enforceable, noncompete agreements must be necessary to protect the employer's legitimate business interests, must not be harmful to the general public, and must not be unreasonably burdensome to the employee. One thing employers need to keep in mind is that the position of the employee against whom enforcement of a noncompete agreement is sough can make a difference. 

The scope of what constitutes legitimate business interests is rather narrow. Generally, employers are less likely to be able to enforce noncompete agreements against employees who did not have special or extraordinary duties with the company, or who did not provide services in a learned profession. The average rank and file employee is not usually a good candidate for an enforceable noncompete agreement. Protection from misappropriation of trade secrets or confidential customer lists is also considered a legitimate business interest.

Making good use of restrictive covenants, especially noncompete agreements, is not necessarily an easy matter. Overbroad use of these agreements will not ultimately result in protection of the business’ interests, and yet it is important to ensure restrictive covenants are robust enough that they will be upheld in court. An experienced attorney will be able to carefully advise a business on how to draft and negotiate effective restrictive covenants to ensure the business’ interests are protected.

Source:

Natural Organics, Inc. v. Kirkendall, 52 A.D.3d 488 (2008), Supreme Court, Appellate Division, Second Department, New York.

OTG Mangement, LLC v. Konstantinidis and SSP America, 40 Misc.3d 617, 967 N.Y.S.2d 823 (2013) N.Y. Slip Op. 23187.

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