Non-Solicitation Agreements in New York: Enforceability Rules

Federal law does not directly regulate non-solicitation agreements as a national standard. Instead, the enforceability of non-solicitation agreements is governed by state law where the contract is formed or performed. The Second Circuit Court of Appeals, which covers New York, applies the Restatement (Second) of Contracts framework in federal cases involving New York employees. Under this framework, a covenant not to solicit is enforceable if it is reasonable in scope, time, and geographic area, and if it is necessary to protect legitimate business interests such as trade secrets, customer relationships, or confidential information.

The federal approach recognizes that while the law disfavors restraints on trade, reasonable restrictions that protect legitimate interests are enforceable. The NLRB (National Labor Relations Board) has jurisdiction over some aspects of non-solicitation agreements—specifically, provisions that restrict employees' rights to solicit union membership or engage in protected concerted activity are invalid under the National Labor Relations Act. However, neutral non-solicitation provisions that apply equally to all employees and do not target union activity are generally permissible. Remedies available in federal court include injunctive relief and damages for breach, subject to state law limitations on damages.

New York's approach to non-solicitation agreements is governed primarily by New York General Obligations Law § 5-322.1, which was enacted in 2016 and significantly reformed the enforceability of restrictive covenants. Prior to this statute, New York courts applied the "reasonableness" test from common law, which remains the foundation but is now codified.

Under § 5-322.1, a non-solicitation agreement is enforceable only if: (1) it is reasonable in temporal, geographic, and customer/employee scope; (2) it protects a legitimate business interest of the employer, such as substantial business relationships or customer goodwill; (3) it was entered into in good faith and not as a condition of employment for an existing employee unless the employee receives a substantial benefit beyond continued employment; and (4) it does not impose an undue hardship on the employee or conflict with the public interest.

New York law distinguishes between non-solicitation of customers and non-solicitation of employees. Customer non-solicitation agreements are generally more easily enforceable if they protect demonstrable customer relationships. Employee non-solicitation agreements face greater scrutiny, particularly when they restrict an employee's right to recruit former colleagues, as this may implicate public policy concerns about restraints on labor mobility. The statute requires that for existing employees, a non-solicitation agreement imposed as a condition of employment must be supported by "consideration" beyond continued employment—such as a promotion, a raise, or access to confidential information.

New York law is generally stronger in protecting employee mobility than some other states. Courts consistently refuse to enforce agreements that are overbroad in time or territory. Geographic restrictions that extend beyond the actual territory where the employer conducts business are often struck down as unreasonable. Temporal restrictions exceeding three years for customer non-solicitation or one year for employee non-solicitation face a heavy burden of proof. Additionally, New York courts apply a "blue pencil" doctrine only narrowly—meaning they will not typically rewrite an overbroad agreement to make it reasonable; instead, they will strike it down entirely or sever only the unreasonable portions if the agreement is divisible.

Non-solicitation agreements are not enforceable in New York if they are overbroad in temporal, geographic, or customer/employee scope. Agreements that restrain an employee's right to earn a livelihood or that impose an undue hardship may be unenforceable as a matter of public policy. Non-solicitation provisions that restrict an employee's ability to solicit co-workers for union organizing or protected concerted activity under the National Labor Relations Act are void.

Non-solicitation agreements imposed as a condition of continued employment on existing employees without substantial consideration beyond continued employment are unenforceable under NY General Obligations Law § 5-322.1. However, consideration may include access to confidential information, trade secrets, customer lists, or a promotion. Agreements that violate the Inevitable Disclosure Doctrine or that prevent disclosure of information required by law are not enforceable. An employee cannot be required to sign a non-solicitation agreement that would prevent them from disclosing wage information, workplace safety violations, or information protected under whistleblower statutes.

New York courts apply strict construction against the drafter; ambiguities in a non-solicitation agreement are construed against the employer. At-will employment status does not eliminate the enforceability analysis—even at-will employees may be bound by reasonable non-solicitation agreements if they were furnished with adequate consideration or if the agreement was signed at hiring. However, if an employer violates the agreement first (e.g., by wrongful termination), courts may refuse to enforce the non-solicitation clause on equitable grounds. Union employees may be partially protected if a collective bargaining agreement explicitly prohibits or limits non-solicitation covenants.

Step 1: Document the non-solicitation agreement and any violation. Keep the original signed agreement, emails showing the employee's solicitation activity, customer complaints, internal communications showing business relationships at stake, dates of solicitation attempts, and evidence of contact with customers or former employees. Take screenshots of LinkedIn messages, email communications, or other direct contact. Document the names and relationship status of customers or employees being solicited.

Step 2: Assess the agreement's validity under New York law. Review the agreement for specificity regarding temporal scope (how long), geographic scope (what territory), and whether it covers customers or employees. Determine whether the employee received substantial consideration if the agreement was imposed as a condition of continued employment. Consider consulting an employment attorney to evaluate whether the agreement meets the reasonableness standards under NY General Obligations Law § 5-322.1 before taking enforcement action. A defective or overbroad agreement may be unenforceable, which could expose the employer to liability for damages if wrongfully interfering with the employee's work opportunities.

Step 3: Send a cease and desist letter. Before filing suit, send a formal written notice to the employee via email and certified mail demanding immediate cessation of the solicitation activity. Reference the specific non-solicitation agreement, the date it was signed, and the conduct that violates it. Provide a reasonable deadline (typically 10–14 days) to cease the conduct. Include a warning that continued violation will result in legal action. This creates a clear record of intent and may support a later claim for injunctive relief.

Step 4: File a motion for preliminary injunctive relief. If the employee continues the solicitation, the employer should immediately contact an attorney to file suit in New York Supreme Court (Trial-level courts). The employer should seek a Temporary Restraining Order (TRO) and a preliminary injunction to stop the conduct before trial. At the TRO hearing, the employer must demonstrate: (1) a likelihood of success on the merits (that the non-solicitation agreement is enforceable and was breached); (2) irreparable harm (that monetary damages cannot adequately compensate for loss of customer relationships); and (3) that the balance of hardships favors the employer. Courts often grant preliminary injunctions in non-solicitation cases because customer relationships are difficult to quantify and remedy through damages alone.

Step 5: Pursue damages and litigation. If a preliminary injunction is granted, the case proceeds to trial to determine liability and damages. Recoverable damages include: lost profits from diverted customers, costs of acquiring replacement customers, harm to business relationships, and potentially attorney's fees if the agreement contains a prevailing party clause. The litigation process typically takes 6–18 months from filing to trial. Settlement discussions are common after a preliminary injunction is issued. Consult an employment attorney experienced in non-solicitation enforcement in New York to navigate discovery, depositions, and trial strategy.