Non-Compete Clauses: Uses and Enforceability

Sep 16, 2026

Non-compete clauses are restrictive covenants designed to prevent departing employees from becoming direct competitors and from soliciting clients or using confidential trade secrets. Enforceability depends on careful limits, since courts scrutinize overly broad restrictions that harm a worker’s ability to earn a living. New York applies a three-part reasonableness test: legitimate employer interest, no undue hardship to the employee, and no injury to the public.

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Non-Compete Clauses: Uses and Enforceability

Purpose of Non-Compete Clauses

Why Enforceability Is Limited

New York’s Three-Part Reasonableness Test

Legitimate Business Interests and Examples

Law Firm of the 21st Century Think Globally. Act Locally. Current Legal Topics: North America • Europe, Middle East & Africa LatinAmerica & Caribbean • Asia Pacific North America Non-Compete Clauses: Uses and Enforceability In a global climate where it is common for people to hold a multitude of different occupations and work in different locations throughout a lifetime, corporations continue to make efforts to protect business interests even after an employee leaves their company. Importantly, despite even the best employee leaving on good terms, a former employee could potentially become a direct competitor, solicit clients, and use a company’s trade secrets. Protecting the corporate interest can depend on the ability to enforce a noncompetition clause. A non-competition clause, or noncompete clause, is a restrictive covenant that endeavors to prevent the employee from becoming a direct competitor of the employer upon departure from a company. Certain restrictive covenants specifically bind the employee by limiting employee’s ability to work in a certain geographic location, or for a specified amount of time, or within a certain field and with certain clients. Not all non-compete clauses are enforceable. In fact, non-compete clauses are generally unpopular and are met with reluctance in the court system.1 A noncompete clause has the negative effect of limiting a person’s ability to work, thus it is scrutinized carefully. Corporations must carefully consider the parameters of the non-compete clause as too many limitations on the former employee may prove ineffective. To find a non-compete clause valid and therefore enforceable, New York courts apply a three-part reasonableness test. The general rule to determine if an employee’s non-competition clause is enforceable is if,“(1) it 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.”2 Therefore, reasonableness varies and the court will look at all the case specifics before making a determination of law. To be effective, thenon-compete agreement should mirror this reasonableness standard. First, the non-compete agreement should outline the corporation’s legitimate business interest. The United States District Court for the Southern District of New York has considered that an employer’s legitimate interest is 1) to prevent disclosure of trade secrets or employee/client solicitation, 2) to prevent disclosure of private client information, or 3) where employee’sskill and service is considered “special or unique.”3 Sometimes, New York courts determine that the restrictive covenant is unnecessary and therefore the non-compete clause is ineffective. For example, in Last v. New York Institute of Technology, a doctor signed an anticompetition clause stating he would not work within 10 miles of the clinic where he was assigned to work.4 The doctor was fired after refusing to relocate elsewhere with the clinic, and he remained in the area seeing patients. Despite signing an anti-competition clause and still practicing in the same area, the Second Judicial Department determined that Eileen Libutti Julie C. Ruggieri Eileen Libutti is the managing partner of Lewis Johs’ New York City office. She is the founding partner of the Special Education Practice Group, where she represents children and their families throughout due process proceedings seeking to secure effective and appropriate individualized educational services for children. Her practice also includes the representation of physicians, healthcare providers, hospitals, individuals and corporate entities from inception through trial. Julie C. Ruggieri is currently a law clerk at Lewis Johs Avallone Aviles, LLP. Previously, she was a summer scholar at the Nassau County Surrogate’s Court. She was admitted to practice law in New York in 2014 and in New Jersey in 2013. Lewis Johs A

FAQs

What is the purpose of a non-compete clause after an employee leaves?

A non-compete clause aims to stop the employee from becoming a direct competitor and to limit conduct such as client solicitation or use of trade secrets. Some clauses also restrict where, when, or for whom the employee may work.

Why are non-compete clauses often difficult to enforce?

They restrict a person’s ability to work, so courts scrutinize them closely. Non-compete clauses are generally unpopular and met with reluctance in the court system, especially when overly broad.

What test do New York courts use to evaluate enforceability?

New York courts apply a three-part reasonableness test: the restriction must not exceed what is required to protect the employer’s legitimate interest, it must not impose undue hardship on the employee, and it must not be injurious to the public.

Sep 16, 2026

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