Restriction In The Workplace: A Case Study

Decent Essays
Under New York law, is a covenant not to compete enforceable when it restricts the previous employee by limiting future employment opportunities within a specified span of time of eighteen months and with similar business to the former employer, within fifteen miles of the previous employer, and when the employee cannot take or have any clients follow them to their new place of employment?

The covenant not to compete that Ms. Rice signed as an employee of Suffolk Speech & Hearing Center (“Suffolk Speech”) will likely be found enforceable in whole. Suffolk Speech will be able to show that the restriction is reasonable to protect their own business interests because the loss of the client Ms. Rice is trying to take with her accounts for a
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In Bdo Seidman, the court held that “protection from competition by a former employee whose services are unique or extraordinary . . .” is good reason for a company to want to protect themselves. 690 N.Y.S.2d at 857 (citing Reed, Roberts Assocs., Inc. v. Strauman, 40 N.Y.2d 303, 308 (1976)). The court held that an accounting firm’s clientele were not unique or extraordinary enough to give rise to protection against competition mainly because the accounting firm was national in nature, and the employee’s status at the firm was not unique or extraordinary in nature at all. Id. at 858. The court further held that if the covenant was enforced, the competition would be unreasonably and unfairly swayed towards Bdo Seidman. Id. The court held in a separate case that the “[employer] has a legitimate interest in preventing [the employee] from disclosing or using confidential information that he learned . . . .” Portware, LLC v. Barot, No. 603738, 2006 N.Y. Misc. LEXIS 376, at *10-11 (N.Y. Sup. Ct. Mar. 2, 2006). The court further stated in that case the difference between confidential and non-confidential information as a further means of limiting competition, and that confidential …show more content…
Rice’s facts, it will be argued that the covenant not to compete does no greater than is required to protect the legitimate interests of the employer. The court ruled in Bdo that a national accounting firm was not a unique or extraordinary business because the services provided were widely available elsewhere and it was greater than necessary to restrict the employee from competing with all people who required accounting services. 690 N.Y.S.2d at 858. However, Ms. Rice and Suffolk Speech provide inherently unique and extraordinary services in that there are very few places of business in the area that provide such services. It would be difficult to argue otherwise. Additionally, competition is not unreasonably restricted because, like in Portware, Suffolk Speech does have a legitimate interest in protecting confidential and non-confidential information from being used by Ms. Rice to compete against Suffolk Speech. 2006 N.Y. Misc. LEXIS 376, at *3. In regards to the school contract that Ms. Rice’s husband was awarded, there are allegations that that was awarded due to a breach of confidential information. Opposing counsel will argue that this is not the case, however it is worth further analysis. Therefore, it can be concluded that the covenant not to compete that Ms. Rice signed as an employee of Suffolk Speech is in fact no greater than is required to protect the legitimate interest of Suffolk

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