An agreement containing a restrictive covenant is an agreement in which one party agrees to limit his conduct in exchange for a benefit. Two common types of restrictive covenants include agreements not to compete and agreements not to solicit. A non-competition agreement is a contract that an individual, often an employee, enters into with another party, often an employer, in which the individual agrees not to offer or engage in services that are competitive with the other party. A non-solicitation agreement is a contract in which an individual, often an employee, enters into with another party, often an employer, in which the individual agrees not to poach employees and/or clients of the other party. Non-competition and non-solicitation agreements may be beneficial to employers because they offer protection for their business models, clients, and/or employees, which they may have spent years developing and training.
The laws governing non-competition and non-solicitation agreements vary from state to state. New York law generally recognizes these restrictive covenants as enforceable to the extent they are reasonable. For more information as to whether or not your restrictive covenants are enforceable, see Enforceability of Restrictive Covenants in New York.
New York employers have several options available to them should an employee, former employee, or other party to a contract violate an enforceable restrictive covenant. Such options include seeking injunctive relief (a court order temporarily or permanently prohibiting the other party from engaging in the conduct that constitutes the violation); seeking reimbursement for monies paid to the other party which are subject to forfeiture as a result of the violation; seeking liquidated damages, pursuant to the contract; seeking payment for lost profits that resulted from the violation; and seeking damages for other applicable claims, such as unfair competition or unjust enrichment.
There are several types of claims commonly recognized by New York courts for a violation of a restrictive covenant. Such claims include 1. Breach of Contract; 2. Tortious Interference with Contract; 3. Tortious Interference with Prospective Advantage; 4. Unjust Enrichment; 5. Unfair Competition; 6. Breach of Fiduciary Duty; and 7. Aiding and Abetting Breach of Fiduciary Duty.
If you are an employer seeking to enforce a restrictive covenant or a party who is subject to a restrictive covenant, contact Maya Murphy, P.C. at (203) 221-3100 for a complimentary consultation to discuss your case.