For several decades, New York’s courts have read the seminal state Court of Appeals decision in Post v. Merrill Lynch, Pierce, Fenner & Smith, 48 N.Y.2d 84, 421 N.Y.S.2d 847, 397 N.E.2d 358 (1979) to mean that once an employee is terminated without cause from her job, her non-compete is rendered unenforceable as a matter of law.1 The rationale behind this reading of Post was twofold.
First and foremost, it was grounded in the New York judiciary’s long-standing “disfavor” for non-compete agreements,2 which “was provoked by powerful considerations of public policy which militate against sanctioning the loss of a man’s livelihood.”3 Second, and less obvious, was the straightforward application of elemental contract law: “[E]nforcing a noncompetition provision when the employee has been discharged without cause would be ‘unconscionable’ because it would destroy the mutuality of obligation on which a covenant not to compete is based.”4 In other words, the (now former) employee cannot be held to an agreement without consideration.
