Question: Dear Alan: I have worked for an investor relations firm in Manhattan for two years. My title is Director of Business Development. When I joined the company I signed a non-compete agreement In it I agreed not to work for another investor relations firm for twelve months after my employment ends for any reason, or to solicit any of the firm’s clients or employees.  

At this time, my company owes me $10,000 for commissions I earned over six months ago. In 2009, I was paid commissions in one lump sum in December, 2009. I understand that New York’s Labor Law requires that commissions must be paid within one month of being earned.

Right now I may have an opportunity to work for another employer who is not an investor relations firm, but that does have similar clients.

My question is this: Is there any way I can get out of this non-compete / non-solicit agreement based on my employer violating the New York Labor Law on commissions?

Thanks. 

         Vince 
         New York, New York  

Answer: Vince, you’ve raised one of my favorite topics: non-compete agreements.

First, you need to know that the New York Labor Law does require payment of commissions to a commissioned employee within a month of their being earned, but that requirement does not apply to employees whose principal activity is of a supervisory, managerial, executive or administrative nature. Based on my experience, I believe courts would categorize your title – “Director of Business Development” – to be of an executive nature.

Second, it would seem to me that you will likely be able to take that new job opportunity, as it is not working for an “investor relations firm.”

Third, though you cannot “solicit” any of your present employer’s clients for their business, I would not expect that your present employer would object – or reasonably could object – to your “soliciting” their clients for a different business. It’s the same thing with their employees: if you were later to “solicit” them to sell them clothing, that would not be the kind of “soliciting” you are prohibited from.

I suggest being upfront with prospective employers. Consider speaking openly with your prospective employer about what your agreement says, and even showing them a copy. You can even give them a copy to show their lawyers. Believe it or not, these decisions are usually made by the “new employer’s” lawyers, who will assess the risk, if any, of your working for their client. Their view is actually the best barometer of whether this should be a problem. If they give their blessing to your coming on board, you’re probably in very good shape.

We offer a Model Letter to assist you in Disclosing your Non-Compete to a Prospective Employer. To obtain a copy [click here].

You might even raise the subject with your present employer’s HR department. While I understand that you will likely be afraid this will “tip your hat” about leaving, I believe that asking what you can do if and when you were ever to leave is not the worst thing in the world. On the other hand, knowing now what you need to know is much better than finding out at the wrong time. Give it some thought. You might also consider obtaining a legal consultation, and even having legal representation at the ready just in case you have a problem.

Companies are concerned about losing business, not about having their clients given other services. I really don’t think you will have a problem.

Hope that helps. And I hope you enjoy our blog. Keep in mind: Subscribing is Free!

Best, Al Sklover

P.S.: One of our most popular “Ultimate Packages” of forms, letters and checklists is entitled “Ultimate Non-Compete Package” consisting of six Model Letters/Memos for non-compete navigation and negotiation, as well as our 185-Point Non-Compete Guide and Checklist.” To obtain a complete set, just [click here].

© 2010 Alan L. Sklover, All Rights Reserved.