3640.05 / Can an employer require a remote worker to sign a noncompete or non-solicitation agreement?
Non-compete agreements are often included in employment contracts to prevent employees from accepting employment in the same line of work as the employer or from opening their own competing businesses. Whether these agreements are enforceable varies from state to state. Employers with a remote workforce will be required to consider state and local laws governing the enforceability of noncompetition or non-solicitation and other employment agreements. Those laws have been evolving rapidly in recent years, so that a non-compete agreement that is enforceable in one state may not be enforceable in the state where the remote employee is situated. Employers who permit employees to work remotely from other states will be responsible for monitoring these developing laws.
As recently as March of 2022, the California Attorney General issued an alert1 reminding employers that non-compete agreements are not enforceable in the state of California. Under California law, non-compete agreements are specifically non-enforceable with respect to California residents even if the company operates in another state that does recognize non-compete covenants as enforceable.
In New York state, non-compete agreements are only enforceable if (1) the agreement is necessary to protect the employer’s legitimate interests, (2) it does not impose an undue hardship on the employee, (3) the agreement does not harm the public, (4) the agreement is reasonable in time period and geographic scope.2