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What constitutes a reasonable duration of a non-compete
restriction in your jurisdiction?
When determining whether a non-compete is reasonable in
duration, New York courts focus on the particular facts and
circumstances of each case.
Courts have repeatedly held that time restrictions of six months
or less are reasonable (Ticor Title Ins. Co. v. Cohen, 173 F.3d
63, 70 (2d Cir. 1999) and Natsource LLC v. Paribello, 151
F. Supp. 2d 465, 470–471 (S.D.N.Y. 2001)). Courts
also have found longer restrictions to be both reasonable and
unreasonable depending on the specific facts of the particular
case. For example, the court denied the employer's motion for a
preliminary injunction enforcing a five-year non-compete in
U.S. Coachways, Inc. v. Silverman, finding that the
five-year non-compete for bus drivers in New York and New Jersey
was unreasonable in length where there was no evidence showing that
this restriction was necessary to protect the employer's
legitimate interests (2007 NY Slip Op 50127(U) (N.Y. Supp.
2007)).
Courts will not inquire into the reasonableness of a non-compete
provision if the employee choice doctrine applies.
What constitutes a reasonable geographic non-compete
restriction in your jurisdiction?
When determining whether a non-compete is reasonable in its
geographic reach, New York courts focus on the particular facts and
circumstances of each case.
The following are examples of geographic restrictions that were
found to be reasonable and unreasonable based on the specific facts
presented:
Five counties specified in a non-compete found to be reasonable
in light of the employee's profession (Karpinski v.
Ingrasci, 28 N.Y.2d 45 (1971)).
50-mile radius found to be unreasonable (Genesis II Hair
Replacement Studio, Ltd. v. Vallar, 674 N.Y.S.2d 207 (App. Div. 4th
Dept. 1998)).
Syracuse-area hospitals found to be unreasonable (Muller v.
N.Y. Heart Center Cardiovascular Specialists P.C., 656 N.Y.S.2d 464
(App. Div. 3rd Dept. 1997)).
Metropolitan areas of New York, Los Angeles, Toronto and
London, and Continental Europe found to be reasonable
considering:
the non-compete lasted six months; and
the employer was required to pay the employee his base salary
during the non-compete period.
(Maltby v. Harlow Meyer Savage, Inc. 633 N.Y.S.2d 926 (Sup.
Ct. N.Y. Co. 1995).)
Citing advances in technology and recognizing that employers
increasingly compete nationally or globally, New York courts have
enforced broad geographic restrictions when they were:
Required to protect the employer's legitimate protectable
interests.
Reasonable in light of other provisions in the non-compete (for
example, duration).
(GFI Brokers LLC v. Santana, No. 06 Civ. 3988 (GEL), 2008
U.S. Dist. LEXIS 59219, at *24 (S.D.N.Y. Aug. 6,
2008).)
However, courts also have found these broad geographic
restrictions to be unreasonable in other cases. For example, in
Good Energy, L.P. v. Kosachuk, the court found that a
nationwide non-compete was unreasonable because the employer did
business in only eight states (853 N.Y.S.2d 75 (N.Y. Sup. Ct.
2008)).
Courts will not inquire into the reasonableness of a non-compete
provision if the employee choice doctrine applies.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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