Non-Compete Agreements in New York
Non-compete agreements have long been a common practice in many industries, with employers often requiring employees to sign such agreements as a condition of employment. However, in recent years, there has been increasing scrutiny of non-compete agreements, both nationally and in New York City.
Non-compete agreements are contracts between employers and employees that restrict employees from working for competitors of the employer, either during their employment or after their employment ends. Non-compete agreements are typically used to protect an employer's trade secrets, confidential information, and customer relationships. They can also be used to prevent employees from taking advantage of the employer's investment in their training and development by leaving to work for a competitor.
Non-compete agreements have been subject to increasing scrutiny in recent years, with many critics arguing that they are unfair to employees and limit job mobility. In response, several states, including New York, have taken steps to limit the use of non-compete agreements.
In New York City, non-compete agreements have historically been common, especially in industries such as finance and technology. However, in 2019, New York State passed a law prohibiting non-compete agreements for low-wage workers. Specifically, the law prohibits employers from enforcing non-compete agreements against employees who earn less than the statutory threshold for overtime exemption, which is currently set at $58,500 per year.
In addition to the state law, there have been several legal developments in New York City that have placed greater scrutiny on non-compete agreements. For example, the New York City Human Rights Law (NYCHRL) has been amended to prohibit retaliation against employees who refuse to sign non-compete agreements or who challenge the validity of such agreements. This amendment also allows employees to recover damages and attorney's fees in lawsuits against employers who retaliate against them for these reasons.
Moreover, the New York State Attorney General has been actively pursuing enforcement actions against employers who use overly restrictive non-compete agreements. In one recent case, the Attorney General's office sued a major technology company for using non-compete agreements that were broader than necessary to protect the company's legitimate business interests.
Given the increased scrutiny of non-compete agreements in New York City, employers should carefully review their use of such agreements and ensure that they comply with the law. Employers should also consider using alternative methods to protect their confidential information and customer relationships, such as non-disclosure agreements and non-solicitation agreements.
For employees, it is important to understand the terms of any non-compete agreement before signing it. Employees should also be aware of their rights under the law, including the right to challenge the validity of a non-compete agreement and the right to refuse to sign such an agreement without fear of retaliation.
Non-compete agreements have long been a common practice in many industries, but they are increasingly subject to scrutiny and regulation. In New York City, there have been recent legislative and legal developments that limit the use of non-compete agreements and provide greater protections for employees. Employers and employees should be aware of these developments and ensure that they comply with the law.
References:
New York State Labor Law, Article 5, Section 201-203
New York City Human Rights Law, Section 8-107
New York State Labor Law, Section 198-c
New York State General Business Law, Section 340
New York State Attorney General's Non-Compete Agreement Best Practices Guidelines (2017)
