Are There Risks To NDAs And Noncompete Agreements?

Last updated on October 8, 2026

Business owners have a great deal of incentive to protect their businesses using whatever legal means are available. Noncompete agreements (noncompetes) and nondisclosure agreements (NDAs) have long been major tools in this pursuit, but they may not be as impactful in New York.

At Sutton Sachs Meyer PLLC, we have worked in New York and New Jersey for a long time, and our lawyers have dedicated themselves to the issues facing businesses. In dealing with protective covenants, such as NDAs and noncompetes, we provide our clients with the information they need to be successful in their pursuit.

The Drawbacks And Limits Of Noncompetes And NDAs

Not worrying about competition from former employees or about sensitive information going public is extremely attractive. However, confidentiality agreements and restrictive covenants have real limits that you must understand:

• They are not endless: A noncompete must be limited in time period to be at all enforceable. An NDA without an expiration is unenforceable in New York.
• They are not all-covering: A noncompete without boundaries on the scope of action is unenforceable.
• They may not last: New York lawmakers are pushing to ban NDAs.

These limits and challenges are something you will have to consider as you pursue a restrictive covenant. With our team on your side, we can provide you with impactful information that will help guide you.

Enforcing Restrictive Covenants: Key Employees Versus Independent Contractors

Courts in New York and New Jersey apply less scrutiny when reviewing noncompete agreements for high-level executives than for independent contractors. This is because key employees with access to sensitive corporate strategies are more likely to cause financial damage. They have direct access to highly sensitive business data, client contacts and trade secrets, so limiting their move to a direct competitor makes practical sense.

In contrast, courts deeply examine noncompete agreements for independent contractors and freelancers. These workers serve multiple clients across the industry to survive, and limiting their access to new opportunities may affect their livelihood. Some judges often invalidate these documents altogether, ruling that the restriction creates an unreasonable hardship.

We Can Enforce Your Agreements

Despite the limitations and possible risks of using NDAs and noncompetes, they are still enforceable. When you find that someone has violated your agreements with them, we can build the case and pursue action. Our commercial litigation attorneys can take your issue head-on.

Common Questions About Noncompetes And NDAs

Below, we answered common questions about confidentiality agreements and noncompete contracts in New York and New Jersey. We compiled these responses to clarify how state legal standards apply to your business.

Can a New York City business enforce a noncompete against a former employee who leaves for a competitor in New Jersey?

Moving across state borders does not automatically cancel your noncompete contract. However, state legal standards require the geographic scope in your agreement to remain reasonable and specific. State laws only uphold the restriction if stopping your new job remains strictly necessary to protect your former employer’s true business interests.

What makes an NDA legally binding and enforceable under New York state law?

Under New York law, a confidentiality agreement must protect actual trade secrets or proprietary data. It cannot just be about general skills and knowledge that people can easily learn on the job. It must also have a defined expiration time frame because the state invalidates agreements after information loses its competitive value. Additionally, it cannot prohibit employees from reporting or discussing workplace discrimination, harassment or unlawful labor practices.

Are noncompete agreements enforceable against independent contractors and freelancers in New York and New Jersey?

Noncompete restrictions rarely apply to independent contractors because state rules treat those limitations as improper employment controls. Since freelancers need freedom to take on various clients, state guidelines routinely invalidate contracts restricting their work. Businesses find that NDAs offer a safer alternative to protect sensitive data when working with freelancers.

It is wise to review your agreements periodically with an employment lawyer. This way, you can be confident your confidentiality terms stay compliant with New York labor and employment laws.

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We’re proud of the reputation we’ve built for business owners across New York City. We help companies deal with the potential conflicts they have in every aspect of their business. We listen to you and create strategies tailor-made for your situation. Call 212-884-9727 or send an email using this form to learn more about how we can help you.