New York Federal Court Enforces Non-Compete for Employee Terminated For Cause
On July 24, 2026, the U.S. District Court for the Northern District of New York granted the plaintiff’s motion for a preliminary injunction in Plug Power, Inc. v. Shokrian, enforcing a one-year non-compete agreement against a former key executive who was involuntarily terminated for cause.
U.S. District Judge Mae A. D’Agostino confirmed that under New York common law, non-compete covenants remain legally enforceable following an involuntary separation if the employee was discharged for cause and held that an employer establishes irreparable harm by showing a risk of disclosure paired with bad-faith conduct, even without proof that confidential information was actually disclosed.
While Bleakley Platt & Schmidt, LLP has been closely following various legislative initiatives and judicial decisions that could limit the enforceability of restrictive covenants in New York, this case demonstrates that in the employment context such covenants remain enforceable and relevant for commercial litigation in the state.
Non-Competes in New York Law
New York has considered legislation that would ban or strictly limit most non-compete agreements several times in recent years. In June 2023, the Legislature passed S3100A (A1278B), which would have banned all non-compete agreements in New York State, but it was vetoed by Governor Kathy Hochul on December 22, 2023, who wanted to limit the ban to middle- and lower-income earners.
In April 2026, the New York State Legislature considered S4641/A01361, which would have banned non-compete covenants for employees who are not highly compensated or are health-related professionals compensated at any salary level. While these bills were not passed during the 2026 legislative session, the persistence of this topic in Albany suggests it is only a matter of time until non-competes are banned in at least some cases in New York State.
Under current case law precedent, a non-compete is enforceable to the extent it (1) is necessary to protect the employer’s legitimate interests, (2) does not impose an undue hardship on the employee, (3) does not harm the public, and (4) is reasonable in time-period and geographic scope. In addition, Judge D’Agostino noted in Plug Power, Inc. v. Shokrian that “[a] non-compete agreement is unenforceable under New York law where the termination of employment is involuntary and without cause.”
The Impact of the Plug Power Decision
In Plug Power, Inc. v. Shokrian, the plaintiff sought an injunction against a former executive who had accepted a similar job with a competitor shortly after his termination for cause. Plug Power, Inc. argued that the defendant had broken his non-compete covenant, which barred him from working “in any capacity” with competitors in their industry for one year.
The court ruled in favor of Plug Power, Inc., granting the preliminary injunction after the plaintiff had established the risk of irreparable harm to its company and a likelihood of success on the merits. This decision offers vital strategic guidance for New York corporate employers in structuring executive agreements and navigating contested terminations.
While New York courts generally disfavor enforcing restrictive covenants against employees terminated without cause, Plug Power demonstrates that these covenants can be enforceable when an employee is terminated for cause. Furthermore, employers seeking preliminary injunctive relief do not need to wait for trade secrets to be used. Access to proprietary data combined with pre-termination actions to conceal competitive activity is sufficient to establish irreparable injury. This case demonstrates that when an employee is terminated for cause, non-competes remain enforceable if they are narrowly tailored and the employee has access to confidential business information (and demonstrates potential intent to use it).
Bleakley Platt & Schmidt, LLP will continue to monitor developments concerning non-competes under New York law. Our Labor and Employment Law and Litigation Practice Groups can help employers proactively review their executive restrictive covenants and enforcement strategies, as well as to litigate matters like those at issue in the Plug Power case. Contact us today.