Can my severance agreement stop me from working for a competitor?
It can try, but New York courts enforce a non-compete only if it is no broader than needed to protect a legitimate interest of the employer, does not impose undue hardship on you, and does not harm the public. New York has no statute banning non-competes. And if the agreement makes you forfeit the money for competing, an employer that fired you without cause generally cannot enforce that forfeiture.
Is there a statute?
No. A 2023 ban passed both houses of the Legislature and was vetoed in December 2023; successor bills have passed the Senate but not the Assembly. The question remains a common-law one. One sector is different: broadcast employees cannot be required to accept post-employment restrictions at all, and a violation carries damages, fees and costs (Labor Law § 202-k).
The test
A restraint is reasonable “only if it: (1) is no greater than is required for the protection of the legitimate interest of the employer, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public” (BDO Seidman). The employer’s legitimate interest reaches clients you served because the employer assigned them to you, not clients you never served and not clients you brought in yourself.
“Keep the money only if you do not compete”
That is the employee-choice doctrine, and it has a limit. An employer that fired you without cause cannot enforce a forfeiture against you, because doing so “destroys the mutuality of obligation on which the covenant rests” (Post). If you resigned, you can still escape the doctrine by showing constructive discharge, but that is a demanding standard, not merely a worse job (Morris).
What to ask for
- A shorter period and a narrower geography.
- A non-solicit limited to the clients you actually served.
- Release from covenants in earlier agreements, including equity award documents.
What should I gather?
- Every restrictive covenant you have ever signed, including ones in equity award documents.
- A list of the clients you served, and which ones you brought in yourself.
- Anything showing whether you were let go or resigned, and why.
Before you sign: what are your claims worth?
A release trades your claims for the severance. If you think you may have a claim, the New York employment case evaluator reviews your answers and documents the way I review a new matter and gives you a realistic pre-suit estimate, so you can compare what you would be giving up with what the agreement pays. It charges only the actual cost of running the analysis, never more than $5. Afterwards you can choose whether to send it to me for review.
This page is general information about New York and federal law, last reviewed September 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Dollar figures, deadlines and pending legislation change. If you are holding an agreement with a deadline on it, speak with a lawyer now.