Getting Fired Without Cause Will Void a Non-Compete Agreement in New York
Non-compete agreements in New York are typically rendered unenforceable if the person subject to the agreement is fired without cause.
Non-compete agreements are disfavored in New York and will only be enforced if there is a legitimate reason. Courts have generally found that no legitimate reason exists if an employee is fired without cause. If the company decides to let the employee go through no fault of the employee, then it would be extremely unfair to restrict that employee’s options in the workplace. A company cannot terminate an employee and then try to prevent that employee from working for a competitor.
But this rule does not apply if you are fired “for cause” or if you resign.
Also, be wary of severance agreements that try to bind you to a non-compete agreement. If you are fired or laid off, do not sign a severance agreement that says you are bound by a non-compete agreement. If you do you could find yourself bound by the non-compete again.
As Donna Ballman explains in the referenced AOL article, the law in each state is different. In California, for example, non-compete agreements are generally unlawful and are rarely enforced. Massachusetts is also considering similar legislation to remove non compete agreements as needless restraints on trade. In my opinion, New York should also outlaw non-compete agreements.