Non-compete agreements are among the most contentious provisions in employment law. For employers, they protect trade secrets, client relationships, and competitive advantages. For employees, they can limit career mobility and earning potential. In New York, the enforceability of non-compete agreements is governed primarily by case law, and courts apply a rigorous analysis that balances the employer's legitimate interests against the hardship imposed on the employee and the public interest.
The legal landscape for non-competes in New York has been evolving rapidly. Legislative proposals to ban or severely restrict non-compete agreements have been introduced repeatedly in recent years, and while a comprehensive ban has not yet been enacted as of 2026, the direction of both legislation and judicial interpretation has been increasingly employee-friendly. Whether you are an employee asked to sign a non-compete, an employer drafting one, or an executive negotiating an exit, understanding the current state of the law is critical.
What Is a Non-Compete Agreement?
A non-compete agreement, also called a non-competition agreement or restrictive covenant, is a contractual provision in which an employee agrees not to engage in competing business activities during or after their employment with the employer. Non-compete clauses are typically found in employment agreements, offer letters, separation agreements, or standalone restrictive covenant agreements. They may restrict the employee from working for a competitor, starting a competing business, or soliciting the employer's clients or employees for a specified period of time and within a defined geographic area.
New York's Framework for Enforceability
New York courts do not automatically enforce non-compete agreements. Instead, they evaluate each agreement on a case-by-case basis using a well-established three-part test. To be enforceable, a non-compete agreement must be necessary to protect a legitimate business interest, must be reasonable in scope including duration, geographic area, and the scope of restricted activities, and must not impose an undue hardship on the employee or be harmful to the public interest.
Legitimate Business Interests
New York courts have recognized several categories of legitimate business interests that can support a non-compete agreement. These include protection of trade secrets and confidential information, protection of an employer's client relationships and goodwill, protection against an employee who has unique or extraordinary skills that are difficult to replace, and prevention of unfair competition where the employee gained specialized knowledge at the employer's expense.
Importantly, a non-compete that merely seeks to prevent ordinary competition is not enforceable. The employer must demonstrate that the employee has access to information, relationships, or capabilities that give rise to a genuine competitive concern beyond simply being a good employee.
Reasonableness of Scope
Even if a legitimate business interest exists, the non-compete must be reasonable in its restrictions. New York courts consider the duration of the restriction, where one to two years is generally considered reasonable for most industries. The geographic scope must be limited to the area where the employer actually conducts business and where the employee had meaningful involvement. The scope of restricted activities must be narrowly tailored to the specific type of work or competition that poses a genuine threat to the employer's interests.
An overly broad non-compete that restricts the employee from working in any capacity for any competitor anywhere in the country for five years would almost certainly be deemed unenforceable. Courts in New York have the power to modify or blue pencil overly broad non-competes by narrowing the scope rather than invalidating them entirely, but this approach is discretionary and not guaranteed.
Undue Hardship and Public Interest
Courts also consider whether enforcing the non-compete would create an undue hardship on the employee. If the restriction would effectively prevent the employee from earning a living in their field, the court may refuse to enforce it. Similarly, if enforcement would harm the public interest, such as restricting access to a healthcare provider or other essential professional in a community with limited alternatives, the court may decline enforcement.
Consideration Requirements
A non-compete agreement, like any contract, requires consideration to be enforceable. For employees who sign a non-compete at the start of employment, the employment itself is generally sufficient consideration. However, for existing employees who are asked to sign a non-compete after they have already begun working, the question of adequate consideration is more complex. New York courts have held that continued employment alone may constitute sufficient consideration, but additional consideration such as a promotion, salary increase, or bonus strengthens the enforceability of the agreement.
Legislative Developments: Proposed Non-Compete Ban
New York has been at the forefront of efforts to restrict or ban non-compete agreements. In 2023, the New York State Legislature passed a bill that would have broadly banned non-compete agreements for all workers, but the bill was vetoed by the governor. Since then, additional proposals have been introduced that would either impose an outright ban on non-competes, ban non-competes for workers earning below a specified income threshold, require employers to pay employees during the restricted period, or impose disclosure requirements at the time of hiring.
As of early 2026, no comprehensive non-compete ban has been enacted in New York. However, the trend toward restricting non-competes continues at both the state and federal levels. Employers and employees should stay informed of any legislative changes that may take effect during the year.
Key Takeaway: While New York has not yet banned non-competes, courts are increasingly skeptical of broad restrictions, and legislative reform is likely in the coming years. Both employers and employees should have their non-compete agreements reviewed by an attorney to assess enforceability under current law.
Garden Leave Provisions
An increasingly common alternative to traditional non-compete agreements is the garden leave provision. Under a garden leave arrangement, the employer continues to pay the employee's salary during the restricted period in exchange for the employee agreeing not to work for a competitor. The employee remains technically employed during the garden leave period, receiving their regular compensation and benefits, but is not required to perform any work.
Garden leave provisions are generally viewed more favorably by courts because they significantly reduce the hardship on the employee. The employee continues to receive compensation during the restriction, which addresses the primary objection to traditional non-competes: that they prevent the employee from earning a living. If New York enacts legislation restricting non-competes, garden leave provisions that include full compensation during the restricted period are likely to survive any reform. For employers, incorporating garden leave into employment agreements provides a stronger basis for enforceability while demonstrating good faith toward the employee.
Industry-Specific Considerations in New York
Financial Services
Non-competes are particularly common in the financial services industry in New York City, where firms invest heavily in client relationships and proprietary trading strategies. Courts have generally been willing to enforce reasonable non-competes for senior financial professionals who have access to confidential client lists, trading algorithms, and investment strategies. However, for junior employees with limited client contact, enforceability is more doubtful. Protocol firms that are members of the Protocol for Broker Recruiting have additional considerations, as the protocol provides a framework for departing brokers to take certain client information when they leave.
Technology and Startups
In the technology sector, non-compete agreements must be balanced against New York's public policy favoring employee mobility and innovation. Courts have been skeptical of broad non-competes for software engineers and developers unless they had access to genuine trade secrets or proprietary technology. Non-solicitation and confidentiality agreements are often more appropriate and enforceable for technology employees than traditional non-compete restrictions.
Healthcare
Healthcare non-competes raise unique public interest concerns. Courts in New York have considered the impact on patient access when evaluating non-competes for physicians, particularly specialists in underserved areas. A non-compete that would deprive a community of access to a needed medical specialist may be unenforceable on public interest grounds even if it would otherwise be reasonable in scope. Healthcare employers should carefully tailor non-competes to protect legitimate interests without creating barriers to patient care.
Media and Entertainment
In New York's entertainment industry, non-compete provisions appear in talent agreements, management contracts, and production company employment agreements. The unique nature of creative work and the project-based employment model common in entertainment present distinct enforceability challenges. Courts are generally reluctant to prevent creative professionals from practicing their craft, particularly when the restrictions are broad enough to effectively bar the individual from their entire profession.
Non-Competes vs. Other Restrictive Covenants
Non-compete agreements are just one type of restrictive covenant. Employers often use several types of restrictive covenants in combination, including non-solicitation agreements which prohibit the employee from soliciting the employer's clients or customers, non-recruitment agreements which prohibit the employee from recruiting or hiring the employer's other employees, and confidentiality or non-disclosure agreements which protect trade secrets and proprietary information.
Non-solicitation and confidentiality agreements are generally easier to enforce than non-compete agreements because they impose a narrower restriction on the employee's ability to earn a living. An employee can work for a competitor while still being bound by a non-solicitation agreement. For this reason, many employers are shifting toward non-solicitation and confidentiality agreements as their primary protective tools rather than relying solely on broad non-compete clauses.
What to Do If You Are Asked to Sign a Non-Compete
If your employer presents you with a non-compete agreement, whether at the start of employment, as a condition of promotion, or as part of a severance package, take the following steps. First, do not sign immediately. Ask for time to review the agreement carefully. Second, have the agreement reviewed by an employment attorney who can assess whether the restrictions are reasonable and enforceable, identify provisions that may be overly broad, and negotiate modifications to protect your interests. Third, negotiate the terms. Non-compete provisions are often negotiable, particularly with respect to duration, geographic scope, and the definition of competing businesses. Fourth, consider the overall compensation package. If a non-compete is a non-negotiable condition of employment, evaluate whether the total compensation justifies accepting the restriction.
What to Do If You Want to Leave and Have a Non-Compete
If you are subject to an existing non-compete agreement and want to change jobs, consult with an employment attorney before taking any action. An attorney can evaluate the enforceability of your specific agreement, advise you on the risks of joining a competitor, negotiate with your current employer for a release or modification of the restriction, and help you navigate the transition in a way that minimizes legal exposure. Many non-compete disputes are resolved through negotiation rather than litigation, and an experienced attorney can often reach a practical resolution that allows you to move forward in your career.
Frequently Asked Questions
Are non-competes enforceable in New York?
Non-competes are enforceable in New York if they protect a legitimate business interest, are reasonable in scope, and do not impose an undue hardship on the employee. Courts evaluate each agreement individually.
How long can a non-compete last in New York?
New York courts generally consider one to two years to be a reasonable duration for most non-compete agreements. Longer restrictions may be upheld in exceptional circumstances but are more difficult to enforce.
Can my employer enforce a non-compete if I was fired?
Courts are generally more reluctant to enforce non-competes against employees who were terminated without cause. However, termination does not automatically invalidate a non-compete. The specific circumstances matter.
Has New York banned non-compete agreements?
As of 2026, New York has not enacted a comprehensive ban on non-compete agreements. However, legislative proposals are ongoing, and the law may change. Consult with an attorney for the most current information.
How Agarunov Law Firm Can Help
Agarunov Law Firm represents both employees and employers in non-compete and restrictive covenant matters throughout New York City and New Jersey. For employees, we review and negotiate non-compete agreements, assess enforceability, and advise on career transitions. For employers, we draft enforceable restrictive covenants tailored to your business needs and ensure compliance with evolving legal standards. Contact us for a free consultation to discuss your specific situation.
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