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John
John, Employment Lawyer
Category: Employment Law
Satisfied Customers: 2698
Experience:  Exclusively practice labor and employment law.
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Hi. I manage a crew of sellers in Times Square who sell

Resolved Question:

Hi.

I manage a crew of sellers in Times Square who sell comedy club tickets to tourists. My employer (a comedy club) wants me to sign a non-compete clause promising to not work for other clubs if I leave them. The contract is for 5 years. The pay is good but I do not want to be "locked in" if a better offer comes along.

We certainly do not provide "unique or extraordinary' services (also no "trade secrets" involved) and it seems that, even if I sign it, the clause would be unenforceable.

Thoughts?

Thanks,
Paul
Submitted: 8 months ago.
Category: Employment Law
Expert:  John replied 8 months ago.
Hi, Paul. My name is XXXXX XXXXX X’m happy to assist you with your question today.

I'm very doubtful that such a non-compete would be enforceable in any court of law.

A non-compete agreement will only be enforced against a former employee if the agreement meets all three prongs of the test laid out by the courts. Courts require that for a non-compete clause to be enforceable, an employer must show reasonableness, in that (1) it has a legitimate business interest sufficient to justify enforcement of the non-compete clause; (2) that the clause does not cause the former employee undue hardship; and (3) that enforcement of the clause will not be harmful to the public.

Under this three part test, courts consider several factors when determining whether a non-compete agreement is reasonable, including: (i) how long the restriction lasts and the geographic area that the restriction covers, (ii) whether the employee was the sole contact with customers, (iii) whether the employee possesses confidential information or trade secrets, (iv) whether the covenant operates to bar the employee's sole means of support, (v) whether the covenant seeks to stifle the inherent skill and experience of the employee, (vi) the likelihood that the employee can find other employment if the restriction is enforced and (vii) whether the benefit to the employer is disproportional to the detriment of the employee.

All the factors favor the agreement not being enforceable against you - its far to long, doesn't protect anything, seems like its there only to stop competition, and disproportionately harms employees. However, unless you are willing to take the matter to court to have the contract ruled invalid, you'll not truly know if thee employer can enforce its agreement. In short, only a court can definitively tell you whether the non-compete is enforceable, but these are the factors that would be considered by a court, and you'd have I believe a good chance to have the non-compete ruled unenforceable.

I believe this answers your question. However, if you need clarification or have follow-up questions regarding this matter, I will be happy to continue our conversation – simply reply to this answer. If you are otherwise satisfied with my response, please leave a positive rating as it is the only way I am able to get credit for my answers. Thank you, XXXXX XXXXX wish you all the best with this matter.

 

Customer: replied 8 months ago.

Thanks, John.


 


In response to (ii), my sales team is indeed the "sole contact with customers." My sellers are the ONLY ones allowed to sell tickets to this comedy club.


 


In order to get a raise, he wants me to sign a 5-year contract agreeing not to represent any other comedy clubs.


 


Lastly, I am an INDEPENDENT CONTRACTOR and I do not technically work for him. He takes no deductions from my weekly checks.


 


Is it still your opinion that, if I choose to leave him before 5 years, this no-compete clause is unenforceable? The contract states that there is a $5,000 penalty for breaching the contract.


 


Thanks,


Paul

Expert:  John replied 8 months ago.
Yes, my opinion of the matter would not change based on the additional facts. The important thing about non-compete law is that no one factor controls the analysis. Thus the fact that you are the exclusive sales team for this club is the only factor in the employer's favor, and all the others still support non-enforceability.

As for you being an "independent contractor" and having a non-compete, the two legal concepts are in direct opposition. If you are truly an independent contractor, one of the keystones to being a contractor is that you are free to work for other persons/employers and are not bound to working for one employer (which would signify "employment"). In any event, your (mis)classification as an independent contractor would not make the non-compete any more enforceable.

I believe this answers your question. However, if you need clarification or have follow-up questions regarding this matter, I will be happy to continue our conversation – simply reply to this answer. If you are otherwise satisfied with my response, please leave a positive rating as it is the only way I am able to get credit for my answers. Thank you, XXXXX XXXXX wish you all the best with this matter.

John, Employment Lawyer
Category: Employment Law
Satisfied Customers: 2698
Experience: Exclusively practice labor and employment law.
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