Esteemed New York Attorney Jeremy Goldstein Offers Advice on Non-Compete Agreements and More

In many ways, Jeremy Goldstein’s career is every bit as impressive as it is long. Prior to founding his own firm and becoming head partner at Jeremy L. Goldstein & Associates LLC, he was a partner at a large law firm basted out of New York. Throughout the course of his career, he’s been involved in some of the largest corporate transactions of the past decade — including but not limited to matters like the pending acquisition of eviCore by Express Scripts, the merger between The Dow Chemical Company and Rohm and Haas Company, the joining of forces between Chevron Texaco Corporation and Unocal Corporation and many, many others.

Because of all this, he’s uniquely positioned to understand that while any workplace needs rules and laws in place that go above and beyond to protect employee rights, they must also defend the interests of those employers, too. The fact that employment law can sometimes vary wildly from state to state (and is also often comprised of federal rules) only makes this harder, not easier, in a lot of situations.

For many organizations, non-compete agreements are an effective way to accomplish both of these goals at the same time. However, this is also a subject that brings with it a wide arrange of different misconceptions and points of confusion — that Jeremy Goldstein lawyer was gracious enough to devote some of his time to address.

What You Need to Know About Non-Compete Agreements

Non-compete agreements can be referred to in a number of different ways, with “non-compete covenants” and “restrictive covenants” being just of the more prominent examples. But the key thing to understand is that this has become a particularly popular technique over the last two decades or so, with approximately 1/5th of the working population having signed one by this point.

At their core, a non-compete agreement prevents any former employees from working with competitors until after several months (or in certain cases, several years) have passed. More than that, the agreement will also go into great detail about the precise location in which former employees can NOT work until the stated time period has finished.

In Jeremy Goldstein’s opinion, it is very important that these types of agreements become a part of formal employment law because if employers don’t draw them up in exactly the right way, they could be taking a significant amount of risk with their current and future success.

Employers can place a non-compete agreement into the contract of an employee when that person is first hired, for example, but the law doesn’t specifically require them to do so. Likewise, a separate non-compete agreement can also be created and presented to those employees at a later date.

The main reason why non-compete agreements are so important comes down to the fact that a lot of organizations have trade secrets that they can’t afford for their competitors to learn. The classic example of this is a food restaurant that has spent a great deal of time (and money) coming up with recipes with secret ingredients so that their menu items can’t be recreated anywhere else. Obviously, those secret ingredients are a major source of that organization’s competitive advantage — thus, they can’t afford to have it fall into the wrong hands.

Another example of this would be a company working with very precise chemical formulas that it doesn’t want to become public knowledge. Regardless of the reason, non-compete agreements are an effective way to make sure that employees are unable to take any “secrets” they learn while on-the-job with them during their transition to another employer.

Having said all of this, Jeremy Goldstein felt that it was important to point out that non-compete agreements can NOT be 100% restrictive. Much of this is due to the fact that the justice system wants to encourage employers to design the types of agreements that are “reasonable” and “realistic” — meaning that it shouldn’t have any requirements contained insight that cannot be expressly justified.

Overall, the justice system is trying to avoid a situation where an employee feels “coerced” to remain with a particular employer. Protecting the information an employee knows is one thing — literally preventing that employee from going to a competitor if they no longer wish to remain at your business is something else entirely. This all goes back to the idea that non-compete agreements are documents that are trying to walk a very delicate line, protecting the rights of both employees and employers in tandem with one another.

Writing Non-Compete Agreements: Breaking Things Down

Jeremy Goldstein also made it a point to note that organizations must be reasonable about the length of time a non-compete agreement will be enforced for — something that he has encountered time and again during his career. You’re not allowed to forbid your former employees from working for a competitor for a decade, for example — which would be especially problematic if they have a niche set of skills or knowledge that really wouldn’t be valuable in another industry. The chances are high that a court will decline to enforce any non-compete agreement that is active for a period of longer than three or four years.

While writing non-compete agreements of your own, Jeremy Goldstein noted that people need to understand that the document can’t pertain to the entire country as a whole. A business cannot forbid its former employers from working for a competitor in any location in the United States — they must specify a particular geographic region. Typically, those regions are limited to only those areas in which they already conduct business. You can stop an employee from working for a competitor in Cleveland, Ohio if you exclusively do business there, but you wouldn’t be able to prevent them from taking a job with a similar company in Portland, Oregon.

Another important factor to point out is the fact that courts typically expect employers to compensate employees who are asked to sign non-compete agreements. Luckily, this isn’t limited exclusively to financial compensation — simply offering someone a job at a business in exchange for signing a non-compete agreement is enough to “pass the test” in most situations.

If you have an existing employee that you suddenly want to sign a non-compete agreement, however, the chances are high that you’ll have to offer him or her a raise in salary. You could also choose to offer this employee benefits that they do not currently have access to — like more vacation time or sick leave.

Finally, Jeremy Goldstein believes it is of the utmost importance for businesses everywhere to understand that the laws of the federal government do NOT necessarily pertain to non-compete agreements — at least, not in the way most people assume they do. In the vast majority of all situations, state laws are going to dictate what can or cannot be placed in one of these agreements — which means that it will be up to the state courts to enforce them. Over the years, different states have created their own limitations regarding non-compete agreements. New York, for example, has a reputation of being notoriously more favorable to employers in these situations than in other areas like California.

To put it another way, never assume there is a “one size fits all” template you can follow when drafting non-compete agreements for your own employees to sign. Only by consulting the laws of the state you’re operating in — along with legal professionals who have experience in these matters — will you be able to come up with an agreement that protects the rights of both the employee and the employer at the exact same time.

In the end, understand that if you draft an agreement in good faith and it was created for a legitimate reason, the chances are high that it will be enforced. If your agreement imposes unrealistic restrictions and wasn’t created with any basis in reality, the most expensive employment lawyers in the world won’t be able to help you — the courts will likely throw it out sooner rather than later.

About Jeremy Goldstein, Attorney at Law

As the owner and operator of the boutique law firm Jeremy L. Goldstein & Associates, LLC, Jeremy Goldstein remains singularly committed to offering his innovative blend of advice to compensation committees, CEOs, management teams and corporations around the country. Over the years he’s offered insight into corporate governance matters, executive compensation issues and other pressing matters facing business professionals on a daily basis. He has a J.D. from New York University School of Law, an M.A. from the University of Chicago and a B.A. cum laude from Cornell University.

Update 7/21

Jeremy Goldstein recently shared with us the advice he gives new lawyers. Check out the 7 main takeaways from our conversation.

1. Never Stop Educating Yourself

You may have finished law school, but that doesn’t mean your education is over. When Goldstein says this, he isn’t just talking about formal education or continuing education credits. In today’s world, everyone is looking for trusted specialists who are authorities in specific parts of their industry. As a lawyer starting out, this is your chance to discover the niche or specialty you want to claim as your own.

Once you identify it, start reading as much as you can about it. Yes, you’re probably sick of studying, but this isn’t like studying for law school or the bar exam. This is more like pursuing a passion that will fire you up and set you apart from your competitors. You might work on general law matters now, but this studying and preparation will put you way ahead of your colleagues when the time comes to branch out.

2. Find a Great Mentor

The right mentor can help guide you through your tough early days as a lawyer. When you look for a mentor, don’t limit yourself to one person and one viewpoint. Talk to as many older, more experienced lawyers as you can. They all have something valuable to share. They may have practiced in a different era, but some fundamentals never change.

You may hear conflicting opinions or advice. There’s nothing wrong with that. It forces you to take everything into consideration and use your judgment to decide what’s right for you. When you ask these lawyers for advice, make sure they’re honest with you. A good mentor tells you the truth, even if the truth is something you don’t really want to hear.

There are some things you can’t learn until you experience them yourself. For everything else, use the advice and guidance that make the most sense to you.

3. Make Technology Your Friend

Technology can be a blessing and a curse. For a lawyer who’s starting out, technology is a tool to streamline everything from document preparation to client contact. The internet is an amazing tool that has transformed the legal profession as it has every other industry. Law firms now use technology for communication, records storage and networking. The ability to research information and create presentations can help every lawyer.

Use digital scanning to keep your records and case notes safe. Use good client software like TurboScan. The ability to use technology will give you an edge during trial preparation.

Don’t rely on shady, unreliable internet sources. The law still relies on case law and peer-reviewed research.

Technology can also help outside of your day-to-day work. Build a website that serves as a marketing tool. If you start your own firm, you can use that website to advertise your services.

4. Treat Everyone with Respect

When you’re starting out, your colleagues will probably include recent law graduates like you. They may be at the starting line, but you don’t know where they will finish. They might land at the law firm of your dreams. They might face you in a courtroom one day. If you treat everyone with respect, you earn the same respect from them.

Get to know your peers and colleagues. They’re not just faceless workers. They’re human beings like you. Getting to know them is the first step to establishing a positive working relationship. If you have a reputation for getting along with most of your colleagues, that reputation will serve you well throughout your career.

5. Don’t Pay for a Fake Image

Some lawyers think they have to project an image of success by spending money on expensive suits, slick cars and fancy shoes. That shouldn’t be your concern as a beginning lawyer. You should look professional, but any spare money you have should go to further your career.

Invest in the tools, training and technology that will take your career to the next level. Do that every step of the way. Along the way, you’ll learn what’s a true investment and what’s a scam designed to take your money.

Keep building your career. Build your reputation in your industry. When you arrive at your goal, you’ll be able to afford all the fancy trappings you want.

6. Take Care of Yourself

The legal profession is highly stressful. Lawyers have high rates of depression and alcohol abuse. Most go into this profession with passion and idealism. What happens?

The stress of working long hours, the pressure to perform and the need to stand out from the crowd all contribute to a high-intensity situation. That doesn’t mean you need to give into it, however, and the way to fight it is to take care of yourself.

That means taking care of your physical health. Don’t start living on junk food and caffeinated drinks just because you’re working long hours. Set aside a little time every day to exercise. Even a walk around the block will clear your mind and get you moving. Get the sleep your body needs to function at its best.

One day, you’ll want to retire to enjoy the benefits of all your hard work. You won’t enjoy retirement if your body is trashed by an unhealthy lifestyle.

Taking care of yourself includes your mental and emotional health. Set aside time for your family, friends and hobbies. Refresh your mind, body and spirit so you can stay strong.

7. Be Generous

When you finally achieve some level of success, remember how confused and lost you sometimes felt as a new lawyer. Extend a hand to those young, inexperienced lawyers. Share your struggles and offer your guidance. You may even find fulfillment in teaching new lawyers. It’s a wonderful way to give back to the profession.