Practicing in New York

Are Restrictive-Covenants (Non-Compete Agreements) Enforceable in New York?

By: Whiteman Osterman & Hanna LLP 

For those employers or employes in New York that may wish to impose a restrictive covenant or are asked to sign a restrictive covenant, this article discusses the present state of the law in New York.  While this is a general overview, we would advise you that there are many factors in determining whether a restrictive covenant may be enforceable, and you should seek individual legal counsel to assess your particular situation. 

In New York, a restrictive covenant, whether it be a non-solicitation, non-compete, or non-recruitment clause, is generally considered “reasonable” by a court 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, (3) is not injurious to the public; and (4) is reasonable in time and geographic scope. See Davis v. Marshall & Sterling, Inc., 217 A.D.3d 1073, 1074 (3^rd Dept. 2023), appeal dismissed, 226 N.E.3d 349 (2024) (“While such agreements are generally not favored, they can be justified by the employer's need to protect itself from unfair competition by former employees. 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”).

The application of the test of “reasonableness” of employee restrictive covenants focuses on the particular facts and circumstances giving context to the agreement. The burden rests upon the party seeking to enforce the restraint, to demonstrate that those prongs of the test have been met. 

1. No greater than is required and legitimate interests: This factor depends on what the employer raises as its legitimate interests (i.e. preventing release of trade secrets/confidential information the employee has, if any.) For example, courts have found restrictive covenants to be unenforceable where the employees have not used the employers' confidential business information, or where the employees' services were not extraordinary or unique. If, however, an employer successfully argues that an employee has trade secrets/confidential information, and the only way to protect such information would be to prevent the employee from accepting employment with a competitor, a court may enforce such restrictions.
2. Undue hardship on the employee: This factor is fact specific and depends on the circumstances with respect to the employer's business and the services performed by the employee. Additional facts would be needed to determine the job market in the area beyond the geographic radius set forth in the restrictive covenant in order to determine if enforcing the restriction would place an undue hardship on the former employee (i.e. the restriction prevents the former employee from earning a living within a certain geographic radius). See Hoffman v. Raftopol, 94 N.Y.S.3d 538 (N.Y. Sup. Ct. 2018) (Courts recognize “powerful considerations of public policy which militate against sanctioning the loss of a [person]'s livelihood.”).
3. Injurious to the public: Whether the restriction of the employee’s employment options is injurious to the public, and thus unenforceable as a matter of public policy, will depend on whether there is limited access to vision care in a specific geographic area, or if the restriction otherwise stifles fair competition and competitive wages. If, for example, enforcement of the restriction would result in a shortage of optometrist or optometry services accessible to the public, such a restriction may be found to be unenforceable as a matter of public policy. However, if no such shortage exists and the public will not be harmed, the restriction may be enforced. See Ricca v. Ouzounian, 51 A.D.3d 997, 998 (2^nd Dept. 2008) (“The defendant's contention regarding potential harm to the public is without merit because several other surgeons practice at [the hospital], where the defendant was practicing, and there are at least two other hospitals in the area.”).
4. Reasonable in time and geographic scope: Courts have held that 2-year restrictions are reasonable. However, restricting working within a 30-mile radius of any office or other place of business maintained by their current employer is arguably unreasonable in these circumstances. As such, this factor is likewise fact specific, In Long Island v. St. Johns, for example,the employee’s non-compete restricted him from practicing surgery of any kind within a 10-mile radius of the plaintiff’s offices/hospitals. The court found the restriction geographically unreasonable because it effectively barred him from practicing his chosen field in the New York metropolitan area. Similarly, the employee at hand would be effectively barred from practicing their chosen field within an arguably large geographic area. See Long Island Minimally Invasive Surgery, P.C. v. St. John's Episcopal Hosp., 164 A.D.3d 575, 578 (2^nd Dept. 2018).

Note, Governor Kathy Hochul vetoed a bill in 2023 that sought to ban non-compete restrictive covenants. In February 2025, another bill was introduced and passed by the Senate that likewise seeks to ban non-compete agreements. See S4641.

This update is not intended to serve as legal advice related to individual situations or as legal opinions concerning such situations, nor should they be considered a substitute for seeking legal advice.