Non-Compete/Non-Solicitation Provisions

Newly hired employees, and particularly those who are being hired for executive positions, are often asked to sign agreements which contain non-compete/non-solicitation provisions. Such provisions typically prohibit the employee from engaging in certain specified actions while working for the employer and for some period of time after employment is terminated. For instance, the employee might be prohibited, for whatever time is specified, from (i) engaging in a competing business for him or herself or for another company, (ii) seeking to interfere with the employer’s relationship with its customers, or (iii) seeking to hire away the employer’s other employees and contractors. In executing such agreements both the employer and employee need to give careful consideration to such clauses. From the employee’s perspective, he or she must be cognizant of the fact that the provisions may make it difficult for the employee to earn a living once employment is terminated. As for the employer, it must be careful that the provisions are not too onerous, as overreaching provisions may be held to be invalid. For instance, as a general matter California law will not enforce a non-compete provisions, and other states will be reluctant to enforce a provision which makes it difficult for an employee to earn a living in his or her chosen field. Thus, such provisions should be drafted so that they are tailored to protect the employer’s interests, without unduly burdening the employee.

If you would like to know more about non-compete/non-solicitation, or other employment related agreements, please contact Stephen Goldstein at , or at (212) 586-5555.