Employee Restrictive Covenant Agreement
Cover Terms
The terms below are incorporated into and form part of this agreement.
| Employer | [Legal name of the employer] |
| Employee | [Full legal name of the employee] |
| Employee Title / Position | |
| Effective Date | [Effective date of this agreement] |
| Governing Law | New York |
| Confidentiality | |
| Trade Secrets Duration | Perpetual |
| Other Confidential Information Duration | 24 months |
| Employee Non-Solicitation | |
| Duration | 24 monthsMarket benchmark 24 months · modal of 67 filed agreementsReference only — not part of this agreement. New York sets no statutory cap on duration; enforceability turns on the holistic BDO Seidman reasonableness test rather than a fixed number, and New York treats employee non-recruitment clauses as inherently more reasonable and less restrictive than non-competes. 24 months matches the modal employee non-solicit term observed in benchmarked, publicly-filed employee agreements; 12 months is the common lighter alternative, sized to the employer's actual protectable interest.
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| Customer Non-Solicitation | |
| Duration | 12 monthsMarket benchmark 12 months · modal of 67 filed agreementsReference only — not part of this agreement. 12 months is the most common customer non-solicit term in benchmarked, publicly-filed employee agreements, edging out 24 months by only a narrow margin. New York sets no statutory cap; a customer non-solicit maps directly onto the client-goodwill interest BDO Seidman recognizes and is often the better instrument than a full non-compete, so counsel should size the term to the actual customer relationships protected.
|
| Non-Competition | |
| Duration | 12 monthsMarket benchmark 12 months · modal of 70 filed agreementsReference only — not part of this agreement. 12 months matches the modal non-compete term observed in benchmarked, publicly-filed employee agreements — a common, conservative pick rather than a New York ceiling (New York imposes no statutory cap on duration). Courts weigh time and territory together against the employer's real protectable interest under BDO Seidman, so there is no safe-harbor number; counsel should size the default to the actual role and market. The pending S4641A bill would cap any permissible non-compete at one year if it ever becomes law (pending only; not law).
|
| Restricted Territory | the geographic area in which Employee provided services |
| Competitive Business | [Description of the business activities that constitute competition with the employer.] |
| Specified Competitors | |
| No Business with Covered Customers | |
| Duration | 12 months |
| Non-Investment | |
| Duration | 12 months |
| Non-Disparagement | |
| Duration | 24 months |
Standard Terms
1. Defined Terms
“Competitive Business” means the business activities described in Cover Terms under Competitive Business.
“Confidential Information” means non-public information relating to Employer's business, including trade secrets, confidential customer information, pricing, business processes, technical data, and strategic plans, but excluding information that becomes public through no fault of Employee, the general knowledge, skill, and experience Employee acquired during employment, and information about the ordinary, internal operations of the business that does not itself qualify as a Trade Secret.
“Covered Customers” means customers, referral sources, and business partners the Employee actually developed or serviced, or for whom Employee had responsibility, and with whom Employee therefore had material contact during the 12 months before termination of employment; it does not include customers Employee never met, did not know about, and did no work for.
“Covered Employees” means employees with whom Employee actually worked or whom Employee managed during the 12 months before termination of employment.
“Passive Public Holdings” means ownership of securities of a publicly traded company representing less than five percent of any class of such company's securities, and interests in diversified mutual funds, index funds, and exchange-traded funds that may hold securities of a Competitive Business.
“Protected Interests” means Employer's legitimate business interests in protection against misappropriation of Employer's trade secrets or confidential customer information, protection from competition by a former employee whose services to Employer were unique or extraordinary, and protection of client goodwill created and maintained at Employer's expense.
“Restricted Period” means the duration specified in Cover Terms for each covenant, beginning on the date Employee's employment with Employer ends for any reason.
“Restricted Territory” means the geographic area described in Cover Terms under Restricted Territory.
“Solicit” means to directly or indirectly contact, approach, induce, or encourage any person or entity, on Employee's own initiative, for the purpose of diverting business away from Employer, but does not include responding to general advertisements or accepting the unprompted patronage of a customer who chooses to leave Employer without solicitation by Employee.
“Trade Secrets” means information that qualifies as a trade secret under applicable law, including the federal Defend Trade Secrets Act, 18 U.S.C. § 1839(3), covering information that derives independent economic value, actual or potential, from not being generally known or readily ascertainable and that is the subject of efforts reasonable under the circumstances to maintain its secrecy.
2. Recitals and Protectable Interests
Employee will receive access to Employer's Trade Secrets and other Confidential Information and will develop customer relationships and goodwill on Employer's behalf. Employer and Employee acknowledge that each restrictive covenant in this agreement is included to protect one or more of Employer's Protected Interests and not to restrain ordinary competition. The parties agree that each covenant is no greater than is required for the protection of those Protected Interests, does not impose undue hardship on Employee, is not injurious to the public, and is reasonable in time period and geographic scope, and the parties intend each covenant to be enforceable as written.
Drafting Note Protectable interests
A New York non-compete drafted to block ordinary competition fails. A restraint holds only where it is tied to a specific protectable interest — identified trade secrets, confidential customer information, employer-built client goodwill, or genuinely unique services — because a covenant unconnected to one of those interests is unenforceable regardless of how reasonable its time and geography look .
Drafting Note Every covenant needs a recognized interest behind it
Each covenant in the agreement needs a recognized interest behind it. New York recognizes a short list — trade secrets or confidential customer information, unique or extraordinary services, and client goodwill created and maintained at the employer's expense — and nothing else . General knowledge, skill, and experience and the ordinary, internal operations of the business are not protectable in New York absent a trade secret or breach of trust; a broad confidentiality definition that sweeps them in, without an express exclusion, reaches beyond what the law protects . The non-investment covenant is the exposed one — hardship with no protectable interest behind it is how covenants fail, and a covenant protecting no legitimate interest is unenforceable outright . Two consequences travel with this: a contemporaneous return, deletion, and certification record is the evidence that real trade secrets and confidential customer information were at stake, and an assignee inherits a covenant only as far as the original interest genuinely travels with the deal — an assignment moves the covenant but cannot mint a new interest to support it.
Drafting Note Injunctive relief needs more than a recital
The remedies clause's irreparable-harm recital does not itself secure an injunction. In New York, absent trade secrets, injunctive enforcement of a restraint typically depends on the employee's services being genuinely special, unique, or extraordinary — a demanding, case-by-case standard no boilerplate paragraph can manufacture . The recital does no harm, but it cannot stand in for a covenant actually anchored to a trade secret or to services demonstrably unique.
3. Timing, Consideration, and Employee Acknowledgements
This agreement is effective as of the Effective Date listed in Cover Terms. The parties acknowledge that this agreement is supported by adequate consideration. If this agreement is signed at the outset of employment, the consideration is the offer and commencement of employment. If Employee signs this agreement after employment has begun, the consideration is Employer's continued employment of Employee and any raise, promotion, bonus, or other benefit provided to Employee in connection with signing. Employee acknowledges having had the opportunity to review this agreement, and to consult with independent legal counsel about it, before signing.
Drafting Note Continued-employment consideration mechanics
A post-hire covenant holds only on real consideration, recorded in the consideration recital. A promise not to compete must be supported by adequate consideration like any other contract term , and forbearance from discharging an at-will worker is a legal detriment that can supply it — but that forbearance is real rather than illusory only where employment in fact continues for a substantial period after the covenant is given . Continued employment alone is the weaker basis; fresh, identifiable consideration such as a raise, promotion, or bonus is safer because it does not depend on after-the-fact tenure. And an amendment that adds or expands a covenant mid-employment re-opens the same question, so a routine refresh can quietly create a covenant with no consideration behind it.
4. Confidential Information and Trade Secret Protection
Employee must treat all Confidential Information as strictly confidential. Employee must not use or disclose Confidential Information except as required to perform authorized job duties or with Employer's prior written consent. Employee's obligations regarding Trade Secrets continue for the period specified in Cover Terms under Trade Secrets Duration, for as long as the information remains a trade secret. Employee's obligations regarding other Confidential Information continue for the period specified in Cover Terms under Other Confidential Information Duration. This confidentiality obligation operates alongside, and independent of, the restrictive covenants in this agreement, and does not restrict Employee's use of the general knowledge, skill, and experience Employee acquired during employment or of information about Employer's ordinary internal operations that is not itself a Trade Secret.
5. Permitted Disclosures and Protected Conduct
Nothing in this agreement prohibits Employee from: (a) reporting possible violations of law to any government agency, including the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, or any other federal, state, or local agency; (b) making disclosures protected under whistleblower provisions of any law; (c) discussing wages, hours, or other terms and conditions of employment as protected by applicable law, including Section 7 of the National Labor Relations Act (29 U.S.C. § 157); (d) testifying truthfully in legal proceedings; or (e) filing a sealed complaint in court using Confidential Information without liability. Pursuant to the Defend Trade Secrets Act (18 U.S.C. § 1833(b)), Employee may not be held criminally or civilly liable for disclosing a trade secret in confidence to a government official or attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a sealed court filing. Confidentiality and non-disparagement obligations in this agreement do not waive or restrict rights that cannot lawfully be waived.
Drafting Note Federal protected-activity carve-outs
Confidentiality or non-disparagement language tightened by deleting the protected-activity carve-outs loses its safe footing. Under McLaren Macomb, merely offering an employee terms that broadly waive Section 7 rights — including overbroad confidentiality and non-disparagement provisions — violates the National Labor Relations Act, and the Board's reasoning turns on the breadth of the waiver, not the label of the document. The OpenAgreements New York restrictive covenant form carves Section 7 activity out of both its confidentiality and non-disparagement sections for this reason; a version that swept in wage discussion or other concerted activity would invite an unfair-labor-practice charge no matter how the covenant fares under New York law .
6. Return, Deletion, and Certification of Company Property
Upon termination of employment, Employee must promptly return to Employer all documents, devices, files, credentials, and other materials containing or relating to Confidential Information. Where permitted, Employee must permanently delete electronic copies of Confidential Information from personal devices and accounts. Employee must certify compliance with this section in writing upon Employer's request.
7. Non-Solicitation of Employees
During the Restricted Period, Employee must not Solicit, recruit, hire, or attempt to hire any Covered Employee. This restriction does not prohibit Employee from providing a professional reference upon request or from hiring a person who responds to a general advertisement not directed specifically at Employer's employees. This covenant is included to protect Employer's Protected Interests and is drawn no broader than reasonably necessary to protect them.
8. Non-Solicitation of Customers, Referral Sources, and Business Partners
During the Restricted Period, Employee must not Solicit the business of any Covered Customer. This covenant reaches only Covered Customers — customers, referral sources, and business partners the Employee actually developed or serviced and with whom Employee had material contact — and does not reach customers Employee never met, did not know about, and did no work for. This covenant is included to protect Employer's Protected Interests and is drawn no broader than reasonably necessary to protect them.
Drafting Note Customer non-solicitation
A customer non-solicit that reaches customers the employee never met, did not know about, and did no work for is overbroad. A restraint tied to customer relationships the employee actually developed or serviced through work for the employer holds, and a preserved request for partial enforcement under BDO Seidman leaves a fallback if it is trimmed .
Drafting Note Non-dealing demands more than the goodwill doctrine asks
The optional no-business-with-covered-customers covenant rests on a strong, documented goodwill interest, and stands on weak ground without one. It bars accepting even unprompted patronage — more than New York's goodwill doctrine asks even of a seller of a business, who may accept customers who choose to leave without prompting while remaining barred from active solicitation . Because it demands more from a mere employee than the implied covenant demands of a seller of goodwill, it presses hardest on the undue-hardship prong of the reasonableness test; a version sized to Covered Customers the employee had material contact with is the defensible one, and its inclusion is a deliberate risk decision rather than a default.
9. No Business with Covered Customers
During the Restricted Period, Employee must not accept, service, or do business with any Covered Customer, regardless of whether Employee or the Covered Customer first initiated contact. This covenant reaches only Covered Customers with whom Employee had material contact, is included to protect Employer's Protected Interests, and is drawn no broader than reasonably necessary to protect them.
10. Non-Competition
During the Restricted Period, Employee must not engage in, be employed by, consult for, or have an active ownership interest in any Competitive Business within the Restricted Territory. This covenant is included to protect Employer's Protected Interests and not to restrain ordinary competition, and the parties intend it to be no greater than is required for that protection, to impose no undue hardship on Employee, to cause no injury to the public, and to be reasonable in time period and geographic scope, with its duration and territory sized to Employee's actual role and Employer's actual market. Where Cover Terms list Specified Competitors, this covenant is limited to those named competitors and their affiliates. This covenant is subject to the Broadcast Employee Exclusion section. Passive Public Holdings are permitted.
Drafting Note The reasonableness gate
New York has no general non-compete statute, so every covenant in the agreement stands or falls on the common-law three-prong reasonableness test, and a failure of any single prong invalidates the whole covenant . A restraint survives only where it is tied to a Protected Interest, reaches no further than that protection needs, works no undue hardship on the employee, and is reasonable in time and geography — the Attorney General reads the same reasonableness requirement into time period and geographic scope, and New York courts apply the identical standard to closely related restraints such as customer and employee non-solicits . Adequate consideration establishes only that a covenant is supported, not that it is reasonable, so each covenant must clear the test on its own. And where survival is set per covenant rather than bundled under one duration, no unexamined term hides inside a single survival clause.
Drafting Note Physician covenants under the ordinary test
New York gives physicians no industry-specific statutory shield — its only industry-specific statutory non-compete prohibition covers broadcast employees — so a physician covenant is measured under the same reasonableness framework as any other restraint . A narrow radius, a short term, and preserved patient access are what carry a medical covenant, because the injurious-to-the-public prong is where patient-access and continuity-of-care arguments live and can sink an over-broad medical covenant .
Drafting Note Employee non-solicit sizing
An employee non-solicit sized to Covered Employees rather than drawn at large fits the reasonableness test it still must clear. New York treats employee non-recruitment clauses as inherently more reasonable and less restrictive than non-competes, but they are still analyzed under the same reasonableness test, so the covenant survives on a genuine workforce-stability and goodwill interest held to the Restricted Period .
11. Non-Investment
During the Restricted Period, Employee must not acquire or hold any active ownership interest in, serve as a director, officer, manager, or advisor to, or have material economic participation in any Competitive Business. This covenant is included to protect Employer's Protected Interests and is drawn no broader than reasonably necessary to protect them. Passive Public Holdings are permitted.
12. Non-Disparagement
During the Restricted Period specified in Cover Terms for Non-Disparagement, Employee must not make statements that are intended to or reasonably likely to disparage Employer, its officers, directors, employees, products, or services. This section does not restrict Employee from making truthful statements in legal proceedings, providing truthful testimony, making disclosures to government agencies, or exercising rights protected by law, including rights protected under Section 7 of the National Labor Relations Act (29 U.S.C. § 157).
Drafting Note Federal protected-activity carve-outs
Confidentiality or non-disparagement language tightened by deleting the protected-activity carve-outs loses its safe footing. Under McLaren Macomb, merely offering an employee terms that broadly waive Section 7 rights — including overbroad confidentiality and non-disparagement provisions — violates the National Labor Relations Act, and the Board's reasoning turns on the breadth of the waiver, not the label of the document. The OpenAgreements New York restrictive covenant form carves Section 7 activity out of both its confidentiality and non-disparagement sections for this reason; a version that swept in wage discussion or other concerted activity would invite an unfair-labor-practice charge no matter how the covenant fares under New York law .
13. Physician and Health Care Practitioner Covenants
If Employee is a physician or other health care practitioner, each covenant in this agreement that restrains Employee's practice is limited to a narrow geographic radius and a short duration, and is intended to preserve patient access to care.
14. Broadcast Employee Exclusion
If Employee is a broadcast employee of a broadcasting-industry employer within the meaning of N.Y. Labor Law § 202-k, this agreement does not impose, and no provision of this agreement may be enforced as, a post-employment restriction on Employee obtaining employment in any geographic area, for any period of time, or with any employer or in any industry. This exclusion applies only after Employee's employment concludes; it does not affect any covenant that operates during the term of Employee's employment.
Drafting Note Broadcast exclusion mechanics
For a broadcast employee, a post-employment non-compete is barred outright. A broadcasting-industry employer that requires a post-employment non-compete from a broadcast employee — as to geographic area, time period, or particular employers or industries — is civilly liable for damages, attorneys' fees, and costs . The bar reaches only post-employment restraints; covenants operating during the term of an employment contract are untouched, so it is the restraint aimed at conduct after the job ends that falls outside the statute .
15. Sale-of-Business and Goodwill Covenants
Where a restraint in this agreement arises from Employee's sale of a business and its goodwill, that restraint bars Employee from soliciting the customers of the business sold and does not bar Employee from accepting the patronage of a customer who chooses to leave without solicitation by Employee.
Drafting Note The solicitation versus acceptance line
The sale-of-business clause holds on the line New York's implied goodwill covenant draws. A seller of a business and its goodwill is barred from improperly soliciting the former customers , yet remains free to accept the patronage of customers who leave without prompting — and that implied duty, though permanent, is narrower than an express covenant . A clause that bars a seller from accepting unsolicited business under the banner of goodwill protection reaches past that line; the doctrine restricts solicitation, not acceptance. Sale-of-business and goodwill covenants get more favorable treatment than employee covenants, and while the pending S4641A bill would expressly preserve the category for qualifying owners even under a statutory ban, that is pending only, not law .
16. No Conflicting Obligations
Employee represents that performing duties for Employer and complying with this agreement does not conflict with any prior agreement, court order, or legal obligation binding on Employee. Employee must promptly disclose to Employer any potential conflict that arises during employment.
17. Notice to Future Employers and Other Third Parties
Employer may disclose the existence and terms of this agreement to any prospective employer or business associate of Employee if Employer has a reasonable belief that Employee may breach this agreement. Employee consents to this disclosure.
18. Tolling During Breach
If Employee breaches any restrictive covenant in this agreement, the Restricted Period for that covenant is extended by one day for each day of the breach, so that the full duration of the restriction runs from the date the breach ends. Any extension under this section is limited to the period of the breach; the parties do not intend any open-ended or indefinite extension.
Drafting Note Tolling
An automatic tolling or extension-on-breach clause does not reliably lengthen a New York non-compete. Because no controlling New York rule blesses judicial tolling and duration drives reasonableness, a narrow, time-limited extension is the one that survives; if S4641A becomes law, an extension that pushes the restriction past one year would conflict with the statutory cap .
19. Remedies
Employee acknowledges that a breach of this agreement may cause Employer irreparable harm for which money damages would be inadequate, and that Employer may seek injunctive or other equitable relief in addition to any other remedies available at law. Any fee-shifting between the parties under this agreement is mutual and prevailing-party based.
20. Reasonable Scope and Severability
Each restrictive covenant in this agreement is drawn as a reasonable restraint sized to Employer's Protected Interests from the start and is intended to be enforceable as written rather than in reliance on judicial revision. If any provision of this agreement is found to be unenforceable, the remaining provisions remain in full force and effect, and each restrictive covenant is intended to be independently enforceable, so that a court's refusal to enforce one covenant does not affect the others.
Drafting Note Partial enforcement
A New York court does not reliably save an overbroad covenant. Because partial enforcement is withheld where the employer overreached, a covenant holds best when duration, geography, and activity scope are drawn to the minimum the protectable interest actually requires — an aggressive covenant is more likely to be struck whole than trimmed .
Drafting Note Drafting to scope, not severability
The severability clause is not a strategy for salvaging an over-broad covenant. Partial enforcement in New York is discretionary and conditioned on the employer's own conduct: the state rejects a per se rule invalidating every overbroad covenant , but a court rewrites a covenant to a reasonable scope only where the employer shows an absence of overreaching, coercive use of dominant bargaining power, or other anti-competitive misconduct and sought in good faith to protect a legitimate interest — and where a covenant protects no legitimate interest at all, there is nothing to sever . A covenant drawn to a reasonable scope from the start does not depend on the clause; the severability clause is a backstop, not a license to overreach.
Drafting Note Enforcement posture and the good-faith record
Two enforcement-posture choices can forfeit the good-faith record on which partial enforcement depends . A third-party notice conditioned on a reasonable belief that the employee may actually breach stays within that record; warning a new employer off a worker on the strength of an overbroad covenant is the kind of aggressive enforcement conduct that undercuts it and can invite a tortious-interference claim. Fee-shifting that is mutual and prevailing-party based reads the same way; a one-way employer fee clause layered onto an aggressive covenant reads as the coercive posture that costs an employer the partial-enforcement safety valve .
21. Survival and Expiration of Each Covenant
Each restrictive covenant in this agreement survives the termination of Employee's employment for the Restricted Period specified in Cover Terms for that covenant. Obligations under the Confidential Information and Trade Secret Protection section survive for as long as the relevant information remains a trade secret, and for the period specified in Cover Terms for other Confidential Information. All other provisions survive to the extent necessary to enforce rights that arose during employment.
22. Assignment and Successors
Employee may not assign this agreement or any rights or obligations under it. Employer may assign this agreement to any affiliate, successor, or acquirer of all or substantially all of Employer's business or assets. This agreement is binding on and inures to the benefit of the parties and their respective heirs, successors, and permitted assigns.
23. Governing Law, Venue, and Dispute Process
This agreement is governed by the law listed in Cover Terms. All disputes will be resolved in the courts of the Governing Law state, subject to non-waivable rights under applicable law.
Drafting Note Choice of law
A non-New York choice-of-law clause does not reliably rescue an employer-favorable covenant against a New York-based worker. Under Brown & Brown, a court can disregard the chosen law and apply New York reasonableness limits where the foreign law is truly obnoxious to New York policy .
Drafting Note Governing-law selection posture
An out-of-state choice-of-law clause does not escape New York's limits against a New York-based worker. Governing law set to New York, with venue pointed at the Governing Law state, matches the choices to where the employee actually lives and works — a chosen law that is truly obnoxious to New York policy is disregarded, so a foreign clause cannot be counted on to displace New York's restrictive-covenant rules . The same public-policy screen cuts the other way: a covenant the employee entered under another state's law may not survive New York's, and a no-conflicting-obligations representation surfaces it before it becomes a dispute. And the pending S4641A bill would go further and void choice-of-law and venue clauses used to avoid the statute for workers who reside or work in New York — pending only, not law .
24. Entire Agreement, Amendment, Waiver, and Electronic Signatures
This agreement constitutes the entire agreement between the parties regarding its subject matter and supersedes all prior agreements, understandings, and negotiations on this subject. This agreement may be amended only in writing signed by both parties. A party's failure to enforce any provision does not waive that party's right to enforce it later. This agreement may be executed in counterparts, including by electronic signature, each of which is an original.
Signatures
By signing this agreement, each party acknowledges and agrees to the restrictive covenant obligations above. Employee confirms having read and understood each provision, including the Cover Terms.
Employer
Employer: [Legal name of the employer]
Signature:
Signatory Name: [Full name of the authorized signatory signing for the employer]
Title: [Title of the authorized signatory signing for the employer]
Date:
Employee
Signature:
Print Name: [Full legal name of the employee]
Date: