As a business owner, you know the importance of protecting your company’s interests. Many businesses include a non-compete clause in their employment contracts to prohibit employees from working for a competitor after leaving the company.
Are these clauses legal in New York? If so, how are they enforced?
The importance of non-compete clauses
A non-compete clause is a contract provision that prohibits an employee from joining a competitor or starting a competing business. They are essential for businesses because they protect the company’s investment in its employees. By preventing employees from leaving to start a competing business, non-compete clauses help companies to maintain their competitive edge.
Additionally, non-compete clauses can help to protect a company’s confidential information and trade secrets. By prohibiting employees from sharing this information with competitors, non-compete clauses help businesses to safeguard their intellectual property.
In New York, courts will generally only enforce non-compete clauses if they are deemed to be necessary to protect the employer’s legitimate business interests. For a non-compete clause to be enforceable, it must be reasonable regarding its duration and geographic scope. Additionally, the clause must not impose an undue hardship on the employee.
Non-compete clauses can effectively prevent employees from leaving to start a competing business, but they must be carefully crafted to be enforceable. First and foremost, the clause must be narrowly tailored to protect only your legitimate business interests. Also, you must provide adequate consideration for the employee’s agreement to the clause. Finally, you should have your document reviewed by someone who can ensure it will stand up in New York courts.