As noted in the video, I was recently contacted by a businessman on the West Coast, who was frustrated that he was getting bogged down in a New York-based litigation where the plaintiff was seeking to hold some employees to a restrictive covenant they had signed that seemed somewhat onerous. He expressed that in his prior experience, litigants were able to get an expedited determination by the court as to the enforceabiilty - or unenforceability - of the agreement pretty much right at the outset of the litigation, and he couldn't understand why that wasn't being done in his case.
I responded that there are a number of critical differences between New York and California law on the subject, which is best summarized in the following side-by-side table:
|New York Law
California Business & Professions Code § 16600:
"Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void."
BDO Seidman v. Hirschberg, 93 N.Y.2d 382 (NY Court of Appeals, 1999)
“New York has adopted this prevailing standard of reasonableness in determining the validity of employee agreements not to compete. “In this context a restrictive covenant will only be subject to specific enforcement to the extent that it is reasonable in time and area, necessary to protect the employer's legitimate interests, not harmful to the general public and not unreasonably burdensome to the employee” (Reed, Roberts Assocs. v. Strauman, 40 N.Y.2d 303, 307, 386 N.Y.S.2d 677, 353 N.E.2d 590) …
“Protection of customer relationships the employee acquired in the course of employment may indeed be a legitimate interest … The employer has a legitimate interest in preventing former employees from exploiting or appropriating the goodwill of a client or customer, which had been created and maintained at the employer's expense, to the employer's competitive detriment …
“The prevailing, modern view rejects a per se rule that invalidates entirely any overbroad employee agreement not to compete. Instead, when, as here, the unenforceable portion is not an essential part of the agreed exchange, a court should conduct a case specific analysis, focusing on the conduct of the employer in imposing the terms of the agreement …
“Under this approach … partial enforcement may be justified”
In sum, unlike California, which has a bright-line test that may vitiate a noncompete agreement on its face, New York has no such clear-cut rule; rather, New York has a test that invariably requires a case and fact-specific inquiry to balance the employee's desire to change jobs with the former employer's legitimate interest in protecting its confidential and proprietary business information and client relationships.