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to
compete
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WHEN A NON-COMPETE
UNDER NY LAW
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TO COMPETE OR NOT TO COMPETE THE DEFINITIVE INSIDERS GUIDE TO NONCOMPETE AGREEMENTS IN NEW YORK
INCLUDING:
NY LAW
to
compete
WHAT AN EMPLOYER CAN DO WHEN AN EMPLOYEE OR FORMER
EMPLOYEE VIOLATES HIS NON-COMPETE
or
not to compete
AND,
THE MOST POWERFUL WAY TO DEFEAT A NON-COMPETE
AGREEMENT
IN NEW YORK Insiders Guide to
The
Definitive
to
compete
or
not to compete
The Definitive Insiders Guide to
Non-Compete Agreements in New York
WOR D
A S SO C I AT ION PU BL I SH E R S
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TABLE OF CONTENTS
WHY NOT KNOWING WHETHER YOUR
NON-COMPETE AGREEMENT IS ENFORCEABLE IS
DANGEROUS ........................................................................ 9
WHAT IS A NON-SOLICITATION, OR
NON-COMPETE PROVISION? ..................................... 12
HOW FIDUCIARY DUTY RELATES TO
NON-COMPETE AGREEMENTS ................................. 12
WHAT INFORMATION DOES A TYPICAL
NON-COMPETE AGREEMENT INCLUDE? ............ 14
WHAT DOES A SAMPLE NON-COMPETE CLAUSE
LOOK LIKE? ........................................................................ 15
WHY EMPLOYERS SHOULD CHOOSE CAREFULLY
THE PREFERRED FORUM FOR LITIGATING THEIR
NON-COMPETE DISPUTES .......................................... 16
WHEN A NON-COMPETE AGREEMENT IS
ENFORCEABLE UNDER NEW YORK LAW ............ 20
WHAT HAPPENS WHEN YOUR EMPLOYMENT
CONTRACT EXPIRES IN NEW YORK ...................... 21
WHEN NEW YORK COURTS MAY ACTUALLY
EXTEND YOUR NON-COMPETE AGREEMENT .. 22
WHY NEW YORKS COURTS WONT ENFORCE
NON-COMPETES UNLESS IT IS AGAINST KEY
EMPLOYEES ........................................................................ 24
HOW A NON-COMPETE CAN REMAIN
ENFORCEABLE IN NEW YORK - EVEN IF YOURE
FIRED ..................................................................................... 26
from the privacy of your office or home even before you consult an
attorney.
This Book Is Not Legal Advice
It is also important that you understand the limitations of this
book. Although I believe this book is extremely valuable as a
resource, every case is unique, and presents its own particular
facts and legal issues. Consequently, please do not construe
anything in this book to be legal advice about your case until we
have mutually agreed in writing that I have accepted your case.
So, where to begin?
I think the best place to start is by de-bunking some myths about
non-compete agreements in New York.
Fact #1: Prosecuting or defending a lawsuit over a noncompete agreement is inherently complicated.
New Yorks laws regarding breach of contract in general, and
non-competes specifically, can be highly technical. Aside from
the nature of the relief that each side will from the Court - which
will often include a restraining order - non-compete disputes pit
several competing legal doctrines against each other.
As a case in point, non-competes is one of those rare areas of
the law where cases are often decided shortly after inception (and
frequently based on the pleadings alone), it is essential that you
plead your claims wisely.
Thus, while there are many types of cases which do not require
an attorneys assistance, you would be ill-advised to try that in the
non-compete realm.
10
14
16
17
18
Therefore, where the plaintiff fails to show that the parties or the
claim at issue has a substantial nexus to New York, the claim is
liable to dismissed. In legalese, this is referred to as forum non
conveniens, which means pretty much what it sounds like.
In that unlikely event, New Yorks courts have set forth that the
following criteria will be considered on a motion to dismiss for
forum non conveniens (which, not coincidentally, are the same
factors you
should consider in determining where to bring your lawsuit):
1) The burden on the New York courts;
WHEN A NON-COMPETE
AGREEMENT IS ENFORCEABLE
UNDER NEW YORK LAW
A truthful New York lawyer should admit that it is hard to
predict whether a New York court will enforce a senior-level, key
employees non-compete agreement. That said, New York States
highest court has set forth four (4) criteria that will determine
whether the non-compete (a/k/a restrictive covenant) is
reasonable, and therefore, enforceable:
(1) The restriction does not go beyond that which is needed
to protect a legitimate interest of the employer;
(2) The restriction is not overly broad, and therefore
manifestly unfair, to the employee;
(3) The restriction is not injurious to the public; and,
21
22
23
24
26
28
30
31
34
36
LEXIS 10229, *30 (Sup. Ct. N.Y. Co. Sept. 26, 2008) (The
complaint states that defendants have been unjustly enriched in
receiving the benefits of employment and client relationships,
including that of a special and extraordinary employee who had
access to the highly confidential and proprietary information
of [plaintiff]. [T]his argument is ineffective. Defendants
presumably paid [employee] for her services, and did work in
exchange for payment from clients. Nothing was bestowed upon
them.).
41
46
47
50
51
CONCLUSION
In sum, since the high stakes and level of complexity involved in
assessing the viability of a breach of non-compete agreement, you
owe it to yourself to at least consult with an attorney before you
undertake any actions that could have significant ramifications on
your future employment prospects.
In this realm, minor adjustments in either direction could make the
difference between actions that prove rewarding or devastating.
Jonathan Cooper
52
to
compete
to
compete
or
not to compete
or
not to compete
WHEN A NON-COMPETE
UNDER NY LAW
$16.95
WORD ASSOCIATION
PUBLISHERS
www.wordassociation.com
1.800.827.7903
AGREEMENT
IS
ENFORCEABLE
AND,