5 Things You Should Know About Non-Compete Agreements

Once limited to design engineers, upper management, and C-level executives, employees with almost any special abilities and/or supervisory authority in Long Island are now asked to sign non-competition agreements as a condition of employment. Because a hasty or ill-informed decision at the pre-hire phase can have devastating consequences in later years, partnering with an experienced employment attorney who can review the proposed agreement and negotiate on your behalf may be one of the wisest career investments that you can make.

New York law interprets non-compete agreements fairly broadly and in ways that benefit the employer. However, there are some limits. It may only affect the employer’s market area and may last no longer than 12 months. Furthermore, if taking a new position would not affect the employer’s legitimate business interests, if the employer terminated the employee without cause, or if the employer breached the agreement, the company may not be able to enforce the non-competition agreement.

So, employees have leverage in the litigation phase, and more importantly, in the negotiation phase. There are a few things to consider before signing the agreement.

1. Market Application

Because of globalization, the market limitation factor is not as powerful as it once was, because most firms in Long Island compete with companies in other states and even on other continents. As a rather obvious rule of thumb, the broader the area, the harder it may be to find a similar job.

Consider negotiating for more favorable terms by limiting the geographic scope to a few blocks or boroughs, or limiting it to specific companies (a point that is discussed more at length below).

2. Length

Twelve months is an eternity to be out of work, so in many cases, the industry standard is more like six months. Anything significantly longer than that is more penal than preventative. In fact, a much shorter term, such as a few weeks, is normally sufficient to deter workers from “jumping ship” to a competitor, which is really what these non-competition agreements are intended to do.

3. Competitor Application

Nearly all non-compete agreements prohibit the former employee from taking another job within the industry, and prohibiting people from following their passion and making a living in the only occupation that they are arguably qualified to work in is a significant handicap. Instead, be proactive, come up with a few names of top competitors, and propose that the non-compete agreement be limited to those firms or their subsidiaries and affiliates.

4. Circumstances of Separation

As mentioned earlier, employers cannot enforce non-competition agreements against workers who were terminated without cause, at least in most cases. However, many boilerplate agreements do not make this allowance, so workers should always carefully examine the fine print and assume that the verbiage is crafted in the most employer-friendly way possible.

5. Attorneys’ Fees

The law is less clear on provisions that require workers to pay the employer’s attorneys’ fees if it enforces the non-competition agreement, but like most other items, these provisions are negotiable. The rule in negotiation remains the same: always read the fine print.

For a free consultation with an experienced Long Island employment lawyer who levels the playing field during negotiations and aggressively advocates for you during litigation, contact the Law Office of Cohen and Jaffe, LLP. We routinely handle matters in Nassau County, Suffolk County, Kings County and nearby jurisdictions.

Sources:

• New York Courts – Brown & Brown, Inc., et al., Appellants, v. Theresa A. Johnson, et al., (AD No. CA 13-00340)
• Forbes – The Limits Of Non-Compete Agreements
• New York Courts – Christine ARAKELIAN, Plaintiff, v. OMNICARE, INC., Defendant. (No. 09 Civ. 8070 (PAC))

For a free legal consultation, call 516-358-6900