It is increasingly common for deferred compensation plans to condition those benefits on the employee’s commitment to refrain from competitive activity after the employment relation has ended. While New York law generally proscribes the forfeiture of wages already earned, the forfeiture of non-wage benefits, like stock options and deferred compensation of various forms, is often upheld.1
Where, however, the forfeiture is for engaging in competition with one’s former employer, it is subject to what is commonly called the “employee choice” doctrine. Under that doctrine, courts will enforce such forfeitures without an assessment of reasonableness if the affected employee quits his job and competes because the employee, in that circumstance, had a choice of “preserving his rights under [the benefit plan] by refraining from competition or risking forfeiture of such [benefits] by exercising his right to compete.”2 Nonetheless, “[a]n essential element of the [employee-choice] doctrine is the employer’s ‘continued willingness to employ’ the employee.”3
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