You’ve landed your dream job in the vibrant heart of New York City. Your career is on the rise and you’re excited about the opportunities that lie ahead.
But have you read the fine print in your employment contract? There, nestled among all the legalese, you might find mentions of non-solicitation and non-compete agreements. These clauses can significantly impact your professional future, so it’s critical to understand them fully.
Historically, non-solicitation and non-compete agreements have been problematic for employees because they can be overly restrictive. As a result, New York law has stepped in to limit the scope and power of these types of employment agreements. One new law as of 2023 will make most non-compete agreements unenforceable in New York City.
Your employer can’t just put any terms that they want into an employment contract. Contract terms must be legal in order to be enforceable. They must follow all federal, state, and local laws as well as any rules and regulations set by government agencies. An experienced employment contract lawyer can review the terms of your agreement and negotiate changes as necessary, safeguarding your rights and career prospects for years to come.
What Is a Non-Compete Agreement?
A non-compete agreement restricts employees from working for a competitive business or starting a competing business for a specific period of time after leaving their job.
Non-compete agreements have been controversial for years. While they are meant to protect a company’s competitive advantage, trade secrets, and client base, they can also unreasonably limit an employee’s right to work in their chosen field or industry. This can cause significant harm when workers cannot progress in their careers because of non-compete limitations.
Are Non-Compete Agreements Legal in NYC?
Recently, New York’s policies towards non-compete agreements have shifted dramatically.
Previously, non-compete agreements could be enforced if they were reasonable in scope, protecting a legitimate business interest, and not an undue hardship on employees.
But a new law that’s been passed by the New York legislature is about to hit the Governor’s desk. As soon as the law is signed into effect, it will make almost all non-compete agreements signed from that point onward unenforceable in the state. Non-compete agreements signed before the law goes into effect will be enforced based on the previous standards.
What is New York’s New Non-Compete Law Proposed in 2023?
When non-compete agreements limit the ability of employees to work in their field of expertise, that hurts not just employees but clients and customers, too. For workers in the medical field, non-compete limitations can disrupt patients from getting the continuous care that they need.
As a result, New York’s state government has taken action. Senate Bill S3100A explicitly bans non-compete agreements and similar restrictive covenants in employment contracts. Since passing both the Senate and Assembly, the law now waits for the Governor to sign it into effect.
As soon as the law goes into effect, it becomes illegal for any employer to seek, require, demand, or accept a non-compete agreement from an employee. Not only are any non-compete agreements unenforceable from that point forward, but employees can actually file a legal claim against companies who try to get them to sign a non-compete agreement.
Under the new law, non-compete agreements may be enforced in certain limited cases involving fixed term of service agreements or “garden leave” agreements. Confidentiality agreements, non-disclosure agreements, and non-solicitation agreements remain enforceable.
What Is a Non-Solicitation Agreement?
A non-solicitation agreement is a contractual clause that restricts employees from poaching or “soliciting” talent or clients from their employer. Non-solicitation agreements are similar to non-compete agreements except they’re more limited in scope. Non-solicitation agreements are not included in New York’s ban on non-compete agreements, so they can still be enforced.
Under a non-solicitation agreement, after you leave your current company, you cannot try to convince your former colleagues, customers, or business partners to join you in a new venture, especially if that means taking them away from your former employer.
Click here for an example of a non-solicitation agreement from the SEC. Usually, these types of agreements limit your ability to work competitively for a certain period of time and in a certain geographic area – neither of which can be too broad.
Non-solicitation agreements help protect a company’s confidential information and client relationships. They’re most common in industries where client relationships and talent retention are a high priority, such as law firms, financial institutions, and tech companies.
As you can imagine, a non-solicitation agreement can significantly affect your future career prospects and limit your potential opportunities, especially if you’re in a niche industry where most people are already familiar with one another. It’s critical for your future that you don’t sign a solicitation agreement that will unfairly limit your professional options.
How Enforceable Is a Non-Solicitation Agreement in NYC?
Even if non-solicitation agreements may be okay federally, state law affects whether they can be enforced locally. New York has specific rules for non-solicitation clauses to be enforceable:
- Reasonable in Scope – Any restrictions must be limited in scope and duration so that they are reasonable considering the circumstances. Courts are much less likely to accept terms that prohibit solicitation of all clients for longer than 5 years, for example.
- Protecting Legitimate Interests – The agreement must aim to protect a legitimate business interest such as trade secrets, confidential customer information, or client lists.
- Geographically Reasonable – Non-solicitation terms must be reasonably limited geographically. Clauses that prohibit solicitation worldwide are unlikely to stand muster.
- Notice and Consent – You must be made aware of the non-solicitation clause in your employment contract and explicitly consent to its terms.
- No Undue Hardship – Whatever terms you agree to should not cause you unreasonable hardship when you try to find work again in your field.
Every contract is unique. If you have a non-solicitation agreement in your employment agreement and you’re not sure whether the terms are enforceable, talk to an employment lawyer who can provide personal advice based on your specific circumstances.
A good attorney can make sure you fully understand your contract terms, negotiate for the best possible position for you, and push back against terms that limit your professional potential. Contact us now at Mirza Law to speak to an experienced lawyer about your case.