• New NY Appellate Court Case Addresses Common Non-Compete/Non-Solicit Clause Issues
  • March 3, 2015 | Author: Paul F. Keneally
  • Law Firm: Underberg & Kessler LLP - Rochester Office
  • While restrictive covenants in employment agreements (typically non-compete and non-solicit clauses) remain difficult for employers to enforce, employers keep trying and some courts do enforce them in certain circumstances. A recent decision from the New York State Appellate Division First Department considers many common non-compete/non-solicit clause issues. Fewer v. GFI Grp. Inc. et al. stands for the following propositions:

    • Where an employee is bound by non-compete obligations of different lengths of time in multiple employment agreements, it will be presumed that the longer period of time is unreasonable.
    • Employers may be able to enforce non-solicitation of employee clauses, even where non-compete clauses in the same employment agreements are unenforceable.
    • Where an employee has been replaced quickly and relatively easily, it will be difficult for a prior employer to show that the employee provided the unique and extraordinary services necessary to enforce a non-compete clause.
    • Non-compete clauses will not be enforced where the employer has breached the employment agreement before the employee.
    • Similarly, the "employee choice" doctrine, which allows non-compete clauses to be enforced where the ex-employee has chosen a post-employment benefit in exchange for the non-compete promise, will not be available where the employer has breached the underlying employment agreement before the ex-employee.

    As should be clear from any reading of the restrictive covenant cases, court decisions in these cases are extremely fact-specific. Therefore, it is crucial that competent employment counsel be utilized in drafting, negotiating or litigating restrictive covenants.