A recent decision by the U.S. District Court for the Southern District of New York in Flatiron Health, Inc. v. Carson1 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.

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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.

Ihsan Dogramaci
Pavia & Harcourt
600 Madison Avenue
New York
10022
UNITED STATES
URL: www.pavialaw.com

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