Most noncompete agreements in New York are not enforceable. We have a threestep process we use to analyze noncompete agreements and most every agreement that we analyze turns out to be invalid. In this video, I explain the 3step process, step by step.

The key to understanding noncompete agreements in New York is that courts do not like to enforce them and will do so only in very limited circumstances. This is because noncompete agreements stifle competition and impose undue hardships on the people who sign them.

The first step is called the Legitimate Business Interests test. Courts have determined that noncompete agreements should never be enforced unless the employer can demonstrate a compelling need to do so. In the video, I explain the only possible compelling interest a company could have. The lesson here is that most noncompete agreements will not be enforced unless the employer can establish a compelling interest and they rarely ever can.

New York courts will also enforce a noncompete if the employee has certain unique or extraordinary skills. This is steptwo of our threepart test. Very few people fall into this category though.

Finally, the last step covers people who have been fired in certain situations. Most New York courts will not enforce a noncompete agreement against an employee who was fired under these circumstances that I explain in the video.

The video explains why most noncompete agreements are never enforced. It’s because employers are unable to establish the foundation needed to enforce one. The odds are that your noncompete agreement is unenforceable.


Transcript:

Do you want to know what one of the biggest misconceptions in New York employment law is? It's that noncompete agreements are enforceable against most people. Lots of you have them, but hardly ever are they enforceable. We see hundreds of these things. Most of them are garbage. I'm going to explain to you right now the threestep process that we use at our law firm, and over 90% of the noncompetes that we see turn out to be garbage. Let's dive right in the three steps. But before I start, stay tuned for the third step, because that is the easiest one for most people to apply.
Step one is called the legitimate business interest test. Now, in New York, and the only time they'll ever enforce one is if the company has a legitimate business interest enforcing it. Pretty much the only thing that satisfies that test is if the employee who signed the noncompete has possession of the company's trade secrets. You can probably understand that if an employee has a company's trade secrets and leaves to go to a competitor, how that could be a really devastating thing for the company. Only then will the courts step in and enforce a noncompete agreement.
For step one, the first thing you have to ask yourself is does your company have trade secrets? If so, do you know what they are? But if you're like most people, either your company doesn't have trade secrets at all, or even if they do, you have no idea what they are. A little bit about trade secrets. A trade secret is simply a business practice or method that's secret that a company uses to its advantage over its competitors. Here are a few examples of famous trade secrets.
If you work for a company that has a trade secret and if you know what those trade secrets are, and you know if you're one of those people, then you are one of those rare people that could be held to a noncompete agreement. But like I said, most everyone else out there, like 99.9% of us, don't have it possession of your company's trade secrets. To summarize, in New York, a court will only enforce a noncompete agreement against you if you have possession of your company's trade secrets.
Step two covers people with unique or extraordinary skills. You have to be the inventor of a famous product or maybe a celebrity, like Tom Brady or Michael Jordan, you have to be really, really high profile, like a now nationally renowned expert in your field, or a celebrity, or someone who gives nationwide speeches for your company, you really have to be something truly extraordinary. If you're one of those people, you could be held to a noncompete agreement.
Step three, that is the fired for cause test. Now, believe it or not, in New York, courts will hardly ever enforced noncompete against the person who was fired without cause. The reason for that is simple. If a company isn't even willing to employ you and they let you go for no good reason, they can't stop you from going and get a job in your industry. It's as simple as that. If you have a noncompete agreement, you signed it and it's enforceable, but your company fired you for no good reason without cause, that noncompeting agreement can be thrown in the trash? It won't be enforced.