Why using a Non Compete Agreement found on the Internet is a Bad Idea

A former employee taking customers from a business after having left the company’s employ is many business owner’s nightmare.  Thus, many businesses try to prevent their employees from competing with them during and even after the employment relationship has ended.   The solution seems simple: make  the employee sign a non compete agreement that prevents him or her from ever competing with the business.  Well, it ain’t so easy.

If you just cut and paste your information into a non compete agreement
found on the internet, you may end up falling prey to these guys: www.breakyournoncompete.com.

This is one area of the law where you should check with an attorney,
because it can be difficult to enforce a non compete agreement in New
York courts and the applicable case law is highly fact specific.  New
York dislikes non compete provisions because they tend to inhibit
competition and infringe on a person’s livelihood.   New York courts
will only enforce non compete agreements if the restrictions on the
employee are "reasonable."  The provisions of a non compete agreement
are considered reasonable if

  • they are necessary to protect the legitimate interest of the employer, such as trade secrets and other confidential information;
  • they do not subject the employee to undue hardship, because they are reasonable in duration and geographic area; and
  • they are not injurious to the public.

Note this exception: New York does not allow an employer to enforce
non compete provisions against employees who have been terminated
without cause.

About Imke Ratschko

Imke Ratschko is a New York Attorney helping small businesses, business owners and entrepreneurs with all things "Small Business Law," such as litigation, contracts, business owner disputes, shareholder and operating agreements, sale or purchase of a business, investors, and starting a business. You can reach her at 212.253.1027.

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