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Non-Compete in Employment Agreement - New York

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  • Non-Compete in Employment Agreement - New York

    Hi -

    I am thinking of leaving my job and moving to CA. I would like to stay in the same field, but have what appears to be an overly broad non-compete in my employment agreement. I am a Consulting Manager at a Big 4 Accounting/Tax/Consulting firm. A Manager is the lowest level management position at the firm (just above a Senior Analyst). I would like to change jobs when I move to a smaller firm where I could have an ownership stake, but remain in the same industry. The industry is so small, I would almost certainly find myself at the same clients within the Non-Compete time frame.

    My question is if the agreement is enforceable given how broad it is. Furthermore, if it's not enforceable is it expected that it would be struck down or "blue penciled" to be limited in scope?

    The language is below:



    a. Prohibition on Solicitation. You acknowledge that, because of the nature of your work for the Firm, you will develop, learn of, have access to, or be provided with Confidential Information belonging to the Firm. You further acknowledge that your solicitation or serving of certain Firm clients or potential clients after the termination of your employment inevitably would involve the unauthorized use or disclosure of Confidential Information, and impair the protectible relationships and goodwill of the Firm. Accordingly, you agree that, for two years following your departure from the Firm for any reason, you will not directly or indirectly solicit, accept as a client, or perform services of any type that the Firm can render ("Services") for, any person or entity: (i) for which you provided Services as an employee of the Firm or that received the benefit of such Services at any time during the two years prior to your departure; or (ii) for which you participated in a proposal to provide Services at any time during the one year prior to your departure. You further agree that you will not assist others in such solicitation, client acceptance, or performance of Services. It shall not be relevant that a person or entity desires or prefers that someone other than the Firm render Services or that the person or entity is already served by you or any third party with which you become associated.

    b. Remedies. You acknowledge and agree that the amount of damages to the Firm
    resulting from any breach by you of section 11(a) is uncertain and will be difficult to ascertain or calculate with precision. If you breach section 11(a), in addition to any other legal and equitable remedies the Firm may have, you agree to pay to the Firm liquidated damages in an amount equal to 25% of the gross fees paid for Services rendered in, or as a result of a, violation of section 11(a). Such percentage shall be paid with respect to all such Services rendered by you or a third party at any time during a period of three years from the first date of such violation. You agree that such damages are a reasonable and fair estimate and calculation of the amount of damages that the Firm will incur as a result of your breach of section 11(a). You must make the payment to the Firm within 30 days after each such payment of fees has been made by the client.

    Thanks!
    NYConsultant

  • #2
    Two things:

    Take the contract in its entirety to an attorney. A contract goes above and beyond labor law. The advice on this board is based on labor law.

    Comment


    • #3
      The remainder of the agreement literally deals with salary, vacation allotment, benefits, title, and certain independence issues unique to an accounting firm. I fully plan on bringing this to an attorney but want to know if there are any red flags people can point out to me in advance that may generally ward me away from this idea.

      To the extent it matters, this is a one way agreement as in I am the only signer. It was not counter signed by the firm.

      Comment


      • #4
        Agreed with the other answer. There is no good answer that does not involve you having an attorney read the entire document. However (not my area of expertise) but CA generally speaking does not support NCAs.

        California Business and Professions Code ยง 16600 provides that "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void."
        Last edited by DAW; 06-29-2011, 05:13 PM.
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)

        Comment


        • #5
          One of the reasons that you hire an attorney is for the benefit of their E&O insurance if they give you bad advice.....
          I am not an attorney, and don't play one on TV. Any information given is a description only and should be verified by your attorney.

          Comment


          • #6
            The majority of my work experience is in California and I concur with DAW's observation; his comment that "California generally speaking does not support NCAs" is accurate, as evidenced by the B&P Code. However, and this is the reason you need to take the entire agreement to a lawyer, your agreement most likely has a governing law provision, possibly NY where you are working, or maybe another state where your employer's legal entity is incorporated/registered. The advice you receive from the lawyer needs to be based upon the totality of your agreement, not just the non-compete portion.

            When seeking a lawyer to provide you with advice, ideally you want one with familiarity with NY law, CA law (if that's where you are going) and, to the extent applicable, the governing law state referenced in your agreement.

            Good luck.
            While I may work for lawyers, I am not an attorney. Comments I make are based on my working experiences and should not be interpreted as legal advice.

            Comment


            • #7
              Originally posted by DAW View Post
              There is no good answer that does involve you having an attorney read the entire document.
              I believe DAW meant to say there is no good answer that does NOT involve you
              having an attorney read the entire document.

              Your best/good answer is getting an attorney involved.
              Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

              Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

              Comment


              • #8
                Agreed. .......
                "Reality is that which, when you stop believing in it, doesn't go away".
                Philip K. **** (1928-1982)

                Comment

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