Worried about former employees taking clients or trade secrets to a competitor? A clear, well-written noncompete can protect your business, but only if you follow New York’s strict rules. Courts won’t enforce agreements that are too broad, so you’ll need to make sure yours is specific and reasonable. This blog explains how to craft enforceable protections that actually hold up and give your business a competitive edge.
How restrictive covenants protect your business
Employers use post-employment agreements to reduce risks after an employee leaves. The most common types include:
- Noncompete agreements: Prevent former employees from joining a direct competitor within a defined time and geographic scope
- Nonsolicitation agreements: Restrict former employees from soliciting your clients or recruiting internal talent
- Confidentiality agreements: Safeguard proprietary business information, intellectual property and trade secrets from misuse or disclosure
Each clause serves a different purpose. The law in New York allows restrictions only when they meet a real business need, not just to limit competition.
Understanding these distinctions is important to drafting enforceable and effective protections.
Structure agreements to withstand legal scrutiny
New York courts only enforce restrictions that are fair and match the employee’s role. Best practices include:
- Reasonable in duration: Typically, between six and 24 months
- Geographically limited: Focused on the company’s actual market presence
- Functionally appropriate: Based on the employee’s role, level of access and ability to affect business interests
Courts frequently invalidate sweeping and burdensome restrictions. Tailoring scope and language demonstrates good faith and increases the likelihood of enforcement.
Customize each agreement to the job
Standardized agreements often fall short. What works for an executive won’t work for a junior employee. Each agreement should reflect the individual’s job duties, access to sensitive information and potential to impact the company post-departure.
If responsibilities change, revise and re-sign the agreement. Customized drafting helps ensure legal validity and preserves enforceability.
Write clear and enforceable agreements
Restrictive covenants only work if they’re enforceable. In New York, that means writing them clearly and backing them with valid business reasons. You should consider working with an experienced lawyer who can help you draft and review your employment restrictions through the strategic drafting and review of your employment restrictions. A well-constructed agreement can help preserve client relationships, protect internal assets and reduce the risk of costly post-employment disputes.