Although post-employment covenants not to compete are judicially disfavored in New York because “powerful considerations of public policy…militate against sanctioning the loss of [one's] livelihood,”1 in reality such agreements are usually enforced where courts conclude that they are no greater than necessary to protect an employer’s legitimate business interests, are temporally and geographically reasonable, do not impose an undue hardship on the individual and are not harmful to the public.2 This common outcome is a result of New York’s reasonableness standard. In BDO Seidman v. Hirshberg,3 the New York Court of Appeals held that “[a] restraint is reasonable only if it (1) is no greater than is required for the protection of the legitimate interest of the employer, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public.”4
Employers often impose covenants not to compete upon employees in a variety of situations, frequently as a condition of employment. Although courts commonly enforce restrictive covenants if an employee voluntarily leaves and uses skills developed at the prior employer to establish a competing business, situations where an employer terminates an employee and then seeks to enforce a restrictive covenant present a more difficult and troubling question. Enforcement of a restrictive covenant under such circumstances seems to some to be inherently unfair. An employer, according to this view, should not be permitted to discharge an employee and then attempt to prevent that individual from working for one of its competitors—a prohibition that in some situations can prevent an employee from working in his or her field during the non-compete period. To this day, the law remains unclear as to whether restrictions of this sort should be enforced.
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