Check You Employment Agreement’s Restrictive Covenant – Employment and HR

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Check You Employment Agreement’s Restrictive Covenant


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A recent decision by the U.S. District Court for the Southern
District of New York in Flatiron Health, Inc. v.
Carson
1 found that an employer’s restrictions
on a former employee were unenforceable. This case highlights a
knot that has formed in the law of non-compete agreements. To
untangle the knot, a trial court must look past an accumulation of
other trial court decisions, to the appellate decision that started
it all. That is what the federal trial court effectively did in
this case.

The Law of Restrictive Covenants

Contract law treats employee non-compete agreements differently
than other agreements. In New York, as in many other states, these
agreements are looked at unkindly. It is not infrequent that an
employer is unable to enforce a non-compete agreement.

More generally, these kinds of agreements are called
restrictive covenants in employment contracts. This covers
two kinds of agreement that often come up. One kind is non-compete
agreements, because the employer has said to the employee,
“After you leave, do not compete with me.” The other kind
is non-solicitation agreements, because the employer has said to
the employee, “After you leave, just don’t pitch to my
customers or entice away my employees.” Both of these kinds of
agreements are a restrictive covenant in an employment
contract.

Click here to continue reading . . .

Footnote

1. No. 19 Civ.8999, 2020 WL 1643396
(S.D.N.Y. Apr. 1, 2020).

Originally published May 26, 2020

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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