Many employers in New York include restrictive covenants in their employment contracts. So what is a restrictive covenant and how can it affect you after you leave the company?
A restrictive covenant is an agreement between an employee and employer that is intended to restrict the employee’s ability to compete with the former employer after he or she leaves the position. It may prohibit the employee from seeking new employment in the same field of work for a period of time.
There are various forms of restrictive covenants in New York. They include non-competition agreements, which prevent an ex-employee from seeking work in the same field or industry for a certain time or within a certain geographical radius from the previous employment location. Another form of restrictive covenant is the non-solicitation covenant, which prevents an ex-employee from taking customers or clients from the previous employer. Non-poaching covenants prevent an ex-employee from taking staff from the previous company to a new business. Finally, a confidentiality agreement may prohibit the use of an employer’s confidential information to benefit a new employer.
Restrictive covenants are often complex agreements and may cripple an ex-employee from finding new work at the end of the existing contract. Under New York law, a restrictive covenant must be reasonable. If a court determines the covenant is too restrictive or limiting, the restrictive covenant may be deemed unenforceable. It is vitally important to understand the terms of a contract when entering into a new job to prevent possible employment disputes down the line.
Source: Ezinearticles.com, “What Are Restrictive Covenants in an Employment Contract and What Do They Do?” Nicholas Jervis, accessed on May 10, 2016