Guide from Non-Profit Lawyer in NYC : Non-Compete Agreement

New York General Obligations Law Section 5-322.1 establishes that non-compete agreements are enforceable only if they are reasonable in time, area, and line of business. The statute does not distinguish between for-profit and non-profit employers, meaning your non-profit must meet the same stringent requirements. Courts in New York have consistently held that non-compete restrictions must protect legitimate business interests, such as trade secrets, confidential business information, substantial relationships with prospective or existing customers, or unique or specialized training. For non-profits, legitimate interests might include protecting donor databases, program innovations, or relationships with community partners. A non-profit lawyer in NYC will draft non-compete language that clearly articulates which organizational interests require protection and demonstrates why the specific restrictions are necessary.

New York courts apply a three-part test to evaluate non-compete enforceability: the restriction must be no broader than necessary to protect legitimate business interests, it must not impose undue hardship on the employee, and it must not harm the public interest. For non-profits, courts may scrutinize whether restrictions on former employees or volunteers unduly prevent individuals from earning a livelihood or serving other charitable organizations. The duration of the restriction is particularly important; courts typically find one to two year periods reasonable, while restrictions extending beyond three years face significant enforceability challenges. Geographic limitations must also be tailored to the actual scope of the non-profit's operations. If your organization operates only in Manhattan and the Bronx, a citywide or national restriction would likely be deemed unreasonable and unenforceable.

A legally sound non-compete agreement should include a clear definition of what constitutes competitive activity specific to your non-profit's mission and services. For example, a non-profit providing mental health services might restrict former employees from working for competing mental health providers within a defined geographic area, but should not restrict them from working in unrelated fields. The agreement must specify the duration of the restriction (typically one to two years for non-profits), the geographic scope (limited to areas where your organization actually operates), and the scope of restricted activities (specific programs, services, or donor relationships). Additionally, the agreement should include a severability clause stating that if one provision is found unenforceable, the remaining provisions remain valid. This protects your organization by allowing a court to modify an overly broad restriction rather than striking down the entire agreement. Including a choice of law provision specifying New York law and venue in New York courts ensures predictability if disputes arise.

Non-disclosure agreements, commonly called NDAs, protect confidential information such as donor lists, fundraising strategies, program innovations, and financial data. Unlike non-compete agreements, which restrict where individuals can work, Non-Disclosure Agreements (NDAs) focus on protecting specific information from being shared or used improperly. NDAs are generally more enforceable than non-compete agreements in New York because they do not restrict an individual's right to work or earn a livelihood in their field. For non-profits, NDAs are often preferable to non-compete clauses because they target the actual competitive threat (unauthorized disclosure of sensitive information) without imposing broad work restrictions. Your non-profit lawyer in NYC will help you implement robust NDA provisions that complement or substitute for overly restrictive non-compete language.

Non-solicitation agreements restrict former employees or volunteers from soliciting your organization's donors, members, employees, or clients for a defined period. These agreements are generally more enforceable than non-compete provisions because they impose narrower restrictions. A non-solicitation clause targeting your donor base or volunteer network may be enforceable even when a broad non-compete restriction would fail. Many non-profits find that non-solicitation provisions, combined with strong NDAs, provide adequate protection without the legal risks associated with non-compete agreements. Your non-profit lawyer in NYC can evaluate whether non-solicitation language, confidentiality protections, or a combination of restrictions best serves your organization's needs.

Non-compete disputes in New York are typically brought in New York Supreme Court, which is the trial court of general jurisdiction in each county. If your non-profit is located in New York County (Manhattan), disputes would proceed through the New York County Supreme Court. If your organization is in Kings County (Brooklyn) or Queens County, those county Supreme Courts would have jurisdiction. Appellate review occurs through the Appellate Division of the appropriate department (First Department covers Manhattan and the Bronx; Second Department covers Brooklyn, Queens, Staten Island, and certain suburban counties). New York courts have emphasized in recent decades that non-compete agreements receive heightened scrutiny, and judges frequently find provisions unenforceable for being overly broad. The burden of proof rests with the party seeking to enforce the non-compete agreement to demonstrate that the restriction is reasonable in all respects. If your non-profit seeks a preliminary injunction to prevent a former employee from violating a non-compete agreement, you must demonstrate a likelihood of success on the merits, irreparable harm, and that the balance of equities favors the injunction. A non-profit lawyer in NYC familiar with the practices of the specific county Supreme Court where your organization operates can significantly improve your organization's prospects in enforcement proceedings.

Before pursuing litigation to enforce a non-compete agreement, your non-profit lawyer in NYC will evaluate the likelihood of success based on the specific language in your agreement and the circumstances of the former employee's or volunteer's new position. Courts may refuse to enforce non-compete agreements against non-profit employees or volunteers if the restrictions appear disproportionate to the actual competitive threat or if enforcing the restriction would prevent an individual from earning a livelihood. Additionally, litigation is expensive and time-consuming, and many non-profits lack the resources to pursue lengthy court battles. Your attorney may recommend negotiated settlements, cease and desist letters, or focused injunctions targeting specific conduct (such as donor solicitation) rather than broad non-compete enforcement. Understanding the local court environment, judge preferences, and procedural rules in your county is critical for making informed decisions about whether to pursue enforcement and how to structure your legal strategy.