Enforcement of Noncompete Agreements in New York

Companies spend millions of dollars researching and developing new products. They also spend considerable resources, both time and money, developing new clients and nurturing relationships with existing clients. Employees often play a central role in product and client development projects and, as a result, become privy to sensitive company and client information. During this process, some employees may develop special relationships with key company clients or customers. By using nondisclosure and noncompete agreements with key personnel, companies have been able to inhibit the misappropriation of trade secrets.

Noncompetes, however, have not been as effective a tool for companies trying to protect against the loss of clients or customers to exiting employees. The reason is twofold. First, the law disfavors restraints on trade or commerce. Second, courts have been slow to recognize that employers have a legitimate interest in protecting the resources spent on developing and maintaining clients.