Are non-compete agreements enforceable in New York?
1. Baseline Rule. New York has no non-compete statute; common law controls. The leading case is Reed, Roberts Associates v. Strauman, 40 N.Y.2d 303 (1976), refined by BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (1999), which set the four-part test: a restraint is enforceable only if it (1) is no greater than required to protect a legitimate interest, (2) does not impose undue hardship on the employee, (3) is not injurious to the public, and (4) is reasonable in time and geographic scope.
2. Reasonableness Factors. Legitimate interests are limited to (a) protection of trade secrets or confidential customer lists; (b) protection of an employer's client base where employee services are "unique or extraordinary"; and (c) restraint of unfair competition. Generic skills and general industry knowledge are not protectable.
3. Consideration. Continued at-will employment is generally sufficient, though New York courts often demand a clearer benefit when the agreement is signed mid-employment.
4. Wage Thresholds. None statutorily, though the 2023 vetoed bill would have banned non-competes entirely. New York City and the legislature continue to debate wage-threshold proposals.
5. Blue Pencil / Reformation. New York courts will "partially enforce" or blue-pencil reasonable portions if there is no evidence of bad faith or anti-competitive overreach (BDO Seidman).
6. Industry Carve-Outs. Broadcasters protected by Labor Law § 202-k. Lawyers barred by Rules of Professional Conduct 5.6. Financial-services covenants are widely enforced.
7. FTC Rule. Enjoined nationwide by Ryan LLC v. FTC (E.D. Tex. Aug. 2024); on appeal.
8. Garden Leave / Forfeiture-for-Competition. Widely used in finance. Forfeiture-for-competition clauses analyzed under the more lenient "employee-choice" doctrine (Post v. Merrill Lynch, 48 N.Y.2d 84 (1979)).
9. Choice of Law. New York courts will apply New York law to New York employees notwithstanding contrary choice-of-law clauses where another state's law conflicts with NY public policy.
This is legal information, not legal advice.
- Employer seeks a TRO or preliminary injunction in New York Supreme Court
- You are a broker subject to industry forfeiture clauses
- Your role does not involve unique or extraordinary services and you want to challenge enforceability
- Reed, Roberts Associates v. Strauman, 40 N.Y.2d 303 (1976)
- BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (1999)
- N.Y. Labor Law § 202-k (broadcasters)
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.