When an individual begins work for a new employer, they must often sign a host of documents related to their prospective work and the rights and responsibilities that they will enjoy in their new occupational position. New York employers sometimes include in those hiring agreements specific terms related to the limits they wish to place on their new employees’ options for seeking employment with competing entities. These stand-alone contracts or terms incorporated into other documents are effective non-competition agreements and NCAs must abide by certain criteria in order to be valid.
First, an NCA must be supported by consideration at the time the employee signs off on the contract. This means that the employee is getting something in return for agreeing to forego opportunities with entities that compete for business with the employer. Often, getting a paying job is considered sufficient consideration for the validity of an NCA.
Second, an NCA must protect a legitimate business interest of the employer. This means that NCAs cannot be arbitrary. An employer may not legally bar an employee from seeking work with an entity whose business has nothing to do with the initial employer’s interests.
Finally, an NCA must not be too limiting in terms of its scope. If an NCA seeks to bar an employee from working for competitors for years after their initial employment ends, then the NCA may be invalidated for being too long in duration. Geographic limitations and restraints on the types of work that the employees may be barred from doing may also invalidate NCAs.
It is important to have an attorney review an NCA prior to signing it. However, after the fact, employment law attorneys can help individuals who are struggling to find work due to the burdensome and invalid terms of their NCAs.