Non-Competes in New York: What's Still Enforceable

By Eugene Bondar, Esq.

A business owner asks two versions of the same question every year: can I stop a departing employee from working for a competitor, and is the non-compete I signed actually enforceable? In New York, the honest answer is that it depends, and the signature on the document is not what decides it. New York’s Court of Appeals has said that an employee anti-competitive agreement “will be carefully scrutinized by the courts” and that “we have strictly applied the rule to limit enforcement of broad restraints on competition” (BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 388, 389 (1999)). New York courts enforce a non-compete only when it passes a reasonableness test that looks past the paper to the specifics of the job, the industry, and the interest actually worth protecting.

When is a non-compete enforceable in New York?

New York applies a three-part test: “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,” and “A violation of any prong renders the covenant invalid” (BDO Seidman, 93 N.Y.2d at 388-389). In practice, that breaks down into duration, geographic scope, and the nature of the restricted activity: a six-month restriction limited to a defined territory and a narrow set of competitors looks very different to a court than a two-year, nationwide ban on working “in the industry.” New York courts can narrow an overbroad covenant instead of voiding it outright, a power lawyers often call “blue-penciling,” though the modern rule is more flexible than a literal editing exercise. The Court of Appeals has described the old strict-divisibility requirement as “the now-discredited doctrine that invalidation of an entire restrictive covenant is required unless the invalid portion was so divisible that it could be mechanically severed, as with a ‘judicial blue pencil’” (id. at 395). That relief is discretionary and turns on the employer’s conduct: “if the employer demonstrates an absence of overreaching, coercive use of dominant bargaining power, or other anti-competitive misconduct, but has in good faith sought to protect a legitimate business interest, consistent with reasonable standards of fair dealing, partial enforcement may be justified” (id. at 394). It isn’t something to count on going in.

What counts as a “legitimate business interest”

The reasonableness test only gets an employer partway; the clause also has to protect something courts recognize as worth protecting. In New York, the Court of Appeals has “limited the cognizable employer interests under the first prong of the common-law rule to the protection against misappropriation of the employer’s trade secrets or of confidential customer lists, or protection from competition by a former employee whose services are unique or extraordinary” (BDO Seidman, 93 N.Y.2d at 389). Customer relationships built at the employer’s expense can also qualify: “The employer has a legitimate interest in preventing former employees from exploiting or appropriating the goodwill of a client or customer, which had been created and maintained at the employer’s expense, to the employer’s competitive detriment” (id. at 392). What does not qualify is a desire to avoid ordinary competition, because “the only justification for imposing an employee agreement not to compete is to forestall unfair competition” (id. at 391), and the court refused to extend the covenant in that case to clients the employee brought in “solely to avail themselves of his services and only as a result of his own independent recruitment efforts” (id. at 393). A non-compete written to prevent competition itself, rather than to protect a specific interest, is the version most likely to fail when tested.

Where employers overreach

The most common defect in a non-compete is scope that outruns the interest it claims to protect: a regional sales role with a nationwide restriction, a two-year ban when six months would fully protect the transition of client relationships, or language broad enough to bar any job “in the industry” rather than genuinely competing work. The safer approach, and the one most likely to survive a challenge, ties duration and geography to the specific role, the market the business actually competes in, and the time it realistically takes for a customer relationship or piece of confidential information to stop being commercially sensitive.

Statutory carve-outs and how termination can matter

Reasonableness review isn’t the only limit. In New York, a “broadcasting industry employer shall not require as a condition of employment, whether in an employment contract or otherwise, that a broadcast employee or prospective broadcast employee refrain from obtaining employment: (a) in any specified geographic area; (b) for a specific period of time; or (c) with any particular employer or in any particular industry; after the conclusion of employment with such broadcasting industry employer” (Labor Law § 202-k(2)). A “broadcast employee” is “any on-air employee or off-air employee of a broadcasting industry employer, excluding management employees” (§ 202-k(1)(b)), and the statute contains no salary threshold. It is proof that a clause valid in one industry can be void by statute in another. New York also recognizes a narrower rule, the “employee choice” doctrine. The Court of Appeals has explained that this “exception applies in cases where an employer conditions receipt of postemployment benefits upon compliance with a restrictive covenant,” and that “although a restrictive covenant will be enforceable without regard to reasonableness if an employee left voluntarily, a court must determine whether forfeiture is ‘reasonable’ if the employee was terminated involuntarily and without cause” (Morris v. Schroder Capital Mgt. Intl., 7 N.Y.3d 616, 620-621 (2006)). In Post v. Merrill Lynch, Pierce, Fenner & Smith, 48 N.Y.2d 84, 89 (1979), the Court held that “where an employee is involuntarily discharged by his employer without cause and thereafter enters into competition with his former employer, and where the employer, based on such competition, would forfeit the pension benefits earned by his former employee, such a forfeiture is unreasonable as a matter of law and cannot stand,” reasoning that a termination without cause “necessarily destroys the mutuality of obligation on which the covenant rests as well as the employer’s ability to impose a forfeiture.” Whether a resignation was voluntary is measured by the constructive discharge test: the Court concluded “that the well-established constructive discharge test is appropriate in the context of the ‘employee choice’ doctrine” (Morris, 7 N.Y.3d at 622). That rule is specific to benefit forfeitures, not a general principle that firing someone waives a non-compete. The larger point: enforceability can turn on industry, remedy, and how the employment ended (not just duration and geography), so a form signed once and filed away is a weaker plan than periodic review.

What this means if you’re on either side

For employers, an enforceable non-compete in New York in 2026 is narrow, tied to a real protectable interest, and current with the law as it develops, not the broadest version of the template a lawyer wrote a decade ago. For employees and departing hires, a signed non-compete is a starting point for analysis, not the end of it; the same reasonableness test that protects a business’s legitimate interests also limits how far that business can reach into someone’s next job. Related restrictions (non-solicitation clauses and confidentiality obligations) often do more practical work than the non-compete itself, and are worth reviewing alongside it. For more on protecting confidential information when an employee leaves, see when trade secrets walk out the door.

Whether a specific non-compete or restrictive covenant holds up depends on the exact language, the role, and the facts of the departure. This firm advises employers on drafting enforceable restrictive covenants and represents both employers and departing employees in disputes over non-competes, non-solicitation clauses, and trade secrets as part of my civil litigation practice. The initial consultation is free.

Related services: Civil Litigation & Dispute Resolution · Rockland County Business Litigation

Attorney Advertising. This post is for general informational purposes only and does not constitute legal advice. Non-compete enforceability depends on the specific agreement language, the employee’s role and compensation, and the law of the state that applies; consult an attorney about your specific situation.

Frequently asked questions

Are non-competes automatically enforceable if an employee signed one?

No. Signing the agreement is only the starting point. In New York, a restrictive covenant "will only be subject to specific enforcement to the extent that it is reasonable in time and area, necessary to protect the employer's legitimate interests, not harmful to the general public and not unreasonably burdensome to the employee" (BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 389 (1999), quoting Reed, Roberts Assocs. v. Strauman, 40 N.Y.2d 303, 307 (1976)). A signature does not settle that question.

What's the difference between a non-compete and a non-solicitation agreement?

A non-compete bars someone from working for a competitor or starting a competing business, generally the broadest and hardest restriction to enforce. A non-solicitation agreement is narrower, restricting contact with specific customers or employees rather than the work itself.

Can a non-compete be enforced against a low-wage or hourly employee?

It depends on the industry, not just the paycheck. Some restrictions are barred by statute outright regardless of pay. New York, for example, provides that a "broadcasting industry employer shall not require as a condition of employment, whether in an employment contract or otherwise, that a broadcast employee or prospective broadcast employee refrain from obtaining employment: (a) in any specified geographic area; (b) for a specific period of time; or (c) with any particular employer or in any particular industry; after the conclusion of employment with such broadcasting industry employer" (Labor Law § 202-k(2), added by L. 2008, ch. 398). Outside the carved-out industries, most workers in New York are still subject to the same reasonableness test as everyone else, so confirm the current law before relying on a clause.