Legal Question in Employment Law in New York

Independent contractors and covenants not to compete

How is the enforceability of a covenant not to compete affected in being an independant contractor? Here are the specifics:

1. I am a mortgage broker,

2. I was already working under a verbal 1099 type of agreement (taxes not withheld, social security and FICA my responsibility, etc.)

3. After 7 months at work, my boss makes me sign an employment agreement with the other wokrers, which includes a covenant not to compete

4. The compensation provision includes 3 options for us to select the basis for our compensation, the most attractive of which is the status quo, i.e. there may not be consideration for the covenant not to compete???

I invite your comments.

Thanks!


Asked on 8/29/02, 6:42 am

1 Answer from Attorneys
Thomas Luz Pearce & Luz LLP

Re: Independent contractors and covenants not to compete

Courts don't like covenants not to compete, competition being the lynchpin of our economic system. Although they are enforceable, they are interpreted narrowly.

That said, continued employment has been held on numerous occasions to constitute sufficient consideration for an employment contract, and employment contracts may contain covenants not to compete that are reasonable as to time and geographic scope. So the answer is that the covenant might be enforceable if it fits these criteria.

You should probably have someone review the contract if you want a more specific opinion on its enforceability.

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Answered on 8/29/02, 9:09 am


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