Legal Question in Employment Law in New York

Re: Existing employee wanting to do independent jobs for othe companies

It appears that Thomas Luz is over simplifying, if not generalizing.

In New York state, a covenant not to compete is valid if it passes a three-pronged test. It is reasonable only if it is no greater than is required for the protection of the legitimate interest of the employer, does not impose undue hardship on the employee, and is not injurious to the public. A violation of any of the prongs makes the covenant invalid.

Because of the strong public policy against restricting a person's ability to make a living, the first prong of the test is the most difficult to overcome. Legitimate interests of the employer are limited to preventing disclosure of trade secrets, release of confidential information regarding the employer's customers, and competition for the employer's clients when the employee's services to the employer were deemed special, unique or extraordinary.

Typically, enforcement of a non-compete clause has been available only in cases where the individual employee has the ability and reputation--such as a musician, actor or professional athlete--that his position cannot easily be filled and the employer would suffer irreparable harm if the employee's unique services were made available to a competitor.

Two decisions, BDO Seidman vs. Hirshberg by the New York Court of Appeals and Ticor Title Insurance Company vs. Cohen by the United States Court of Appeals for the Second Circuit, have expanded the interpretation of "unique" to include an employee's relationship with an employer's clients.

That relationship may be so special or extraordinary to justify enforcement of a non-compete clause even where the employee has no special skills and is not using confidential information obtained in the course of employment to compete with his former employer.

Therefore, in our opinion, Mr. Luz is wrong.

Re: Existing employee wanting to do independent jobs for othe companies

Mr. Machanda is simply wrong. There's no "reasonableness" standard in these circumstances. If you are an employee at will and the employer requires as a condition of employment that you can't work for its competitors, then you have to comply or be fired. Please note that either party may terminate the employment relationship at any time regardless of compliance with the rules. In this case, the employer is simply giving notice of its intentions.

In my view, any lawsuit against the employer for refusing to allow you to work for its competitors would be frivolous and would subject you and your attorney to money penalties imposed by the court.

Re: Existing employee wanting to do independent jobs for othe companies

The test is the "reasonableness" standard. Give the office a call at (212) 618-1830 to discuss your case.