Is there a noncompete law?

[salezguy]

Jurisdiction

New York

I just got an employment offer from a mid sized company in New York doing sales. It's a good offer. But it does have a non-compete part that a friend said they couldn't include. I saw a discussion about the court but don't know what it means. If I sign, will it be effective? What if a court decision is different later?

 

[adjusterjack]

Non-compete agreements are legal in NY. Last year a NY bill banning non-competes was vetoed by your Democrat governor.

New York likely to pursue noncompete ban again in 2024

Not only do Democrats possess firm control of the state Legislature, but the governor could introduce her own proposal that would be attached to the state budget.

www.legaldive.com

The recent FTC rule banning non-competes nationally was overturned by a federal judge.

https://www.reuters.com/legal/us-judge-strikes-down-biden-administration-ban-worker-noncompete-agreements-2024-08-20/

My advice, as a former victim of a non-compete, is do not sign it, even if it means not getting the job. If you sign it, it will be enforceable.

When you leave the company the non-compete will leave you unemployable in your occupation. If you want to fight the non-compete you will spend many thousands of dollars defending against a lawsuit if you fail to comply with the contract.

Your prospective employer may tell you "Don't worry, it's just a formality." Don't believe it for a minute. They will sue you in a heartbeat if you go to work for a competitor.

 

[Michael Wechsler]

What @adjusterjack says should be taken seriously, especially with regard to sales. If it's drafted the right way (and I've drafted, reviewed and negotiated many), they will have a 'savings clause' which states something to the effect that if the stated limitation is deemed to be in violation of the law, then both parties agree that a replacement will be in effect that is the maximum amount allowed by law. Exactly what that is can only be determined for sure by a court of law or by an arbitrator and, as you can guess, it is expensive and time consuming. By the time it is determined, your potential job may be long gone.

The second caveat I'll provide is that many employers will ask whether you have a non-compete agreement in place with your current or prior employer. That can have a significant effect on whether they will hire you if that is in the affirmative.

All of this said, I don't think @adjusterjack would disagree that in all circumstances you should reject a job if it means signing a non-compete provided you can negotiate something reasonably acceptable. For example, being able to negotiate a smaller scope and/or shorter term non-compete might be palatable to you if you can negotiate a good severance. I've worked with people to include certain companies they wouldn't jump to immediately and regions or clients they agreed not to serve, e.g., the same ones that the existing employer serves so you won't try to steal their existing accounts that you worked on.

Bottom line is be very wary about signing the non-compete if it may substantially curtail your ability to get another job and, if it's a great opportunity, consider being very rigid on the limits of any non-compete and making sure that it is very specific rather than vague. Good luck to you with whatever decision you make and with your new employment opportunity.

 

[army judge]

But it does have a non-compete part that a friend said they couldn't include.

It is in YOUR best interests NOT to sign or agree to ANYTHING you don't fully understand.

If you have any doubts about any document, consult an attorney to advise you.

Sure, it'll cost you money to retain a good attorney. On the other hand, if you sign it and things go awry, it'll cost you far more than the attorney's fee.

 

[adjusterjack]

I agree that one can attempt to negotiate favorable terms and a solid severance package.

Though the average job seeker doesn't have that kind of leverage and the average employer attitude is sign if you want the job.

 

[zddoodah]

I just got an employment offer from a mid sized company in New York doing sales. It's a good offer. But it does have a non-compete part that a friend said they couldn't include.

Huh?

You wrote that "it does have a non-compete part." I assume "it" refers to the offer. What does "have a non-compete part" mean? Does it mean that, if you accept the job offer, you'd have to sign some sort of non-compete agreement?

And I have no idea what "a friend said they couldn't include" might mean. What is your friend's connection to this job offer? Who are "they"? What does "couldn't include" mean?

I saw a discussion about the court

You saw a discussion? About what court? What does a court have to do with your job offer?

If I sign, will it be effective?

If you're asking whether a non-compete agreement that you might have to sign as a condition of employment will be enforceable, that's obviously impossible to know without reading it.

What if a court decision is different later?

Different than what? Rather obviously, it's impossible to speak intelligently about the impact of some hypothetical court decision.

 

[Michael Wechsler]

You saw a discussion? About what court? What does a court have to do with your job offer?

Different than what? Rather obviously, it's impossible to speak intelligently about the impact of some hypothetical court decision.

I'm guessing that this refers to seeing an online discussion about the court decision. The offer and agreement appears to have a non-compete clause or agreement which would be invalidated by the FTC's ban on non-compete restrictions. Given the timing of the post, the court in issue would be the U.S. federal court in the Northern District of Texas which cast aside the FTC ban. There is a good summary and review by White & Case on the status of non-compete restrictions in employment agreements.