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There has been an aggressive push over the past couple of years by state legislators around the country and the federal government to enact legislation prohibiting or limiting the use of non-compete agreements by employers.  One such bill, entitled the Workplace Mobility Act, was introduced in the U.S. Senate in late April 2018 and seeks to, among other things, prevent employers from “enter[ing] into, enforc[ing], or threaten[ing] to enforce a covenant not to compete with any employee of such employer, who in any workweek is engaged in commerce or in the production of goods for commerce.”  Locally, the New York City legislature introduced a bill in 2017 that seeks to prohibit the use of non-compete agreements for “low-wage employees,” and would require employers to notify potential employees of any requirement to enter into a covenant not to compete prior to hiring the employee.

With potentially impactful legislation looming, courts continue to be highly critical of non-compete agreements.  A recent decision from the Supreme Court in Westchester County illustrates the courts’ focus on ensuring that non-compete provisions are narrowly tailored to serve only the company’s legitimate business interests.

In Cindy Hoffman, D.O., P.C. v. Raftopol (J. Ruderman), the court dealt with a familiar scenario of the enforcement of a non-compete agreement in the medical field.  The “curveball” in this case, however, is that the court was not dealing with a physician leaving a practice to compete elsewhere, but rather a physician’s assistant who left to work for a competitor.  Defendant, Caroline Raftopol (“Raftopol”), a physician’s assistant, was hired in 2012 by Plaintiff Cindy Hoffman, D.O., P.C. (“Hoffman P.C.”), a dermatology practice with three locations in Westchester, Dutchess, and Putnam counties.  Upon hiring, Raftopol was required to sign a non-compete agreement that prohibited her from being employed by a competitor within fifteen miles of any Hoffman P.C. location for two years following the end of her employment.  Raftopol ultimately resigned from her position in May 2017 and, in September 2017, Hoffman P.C. learned that Raftopol was working for a competitor within the geographic restriction set forth in the non-compete agreement.  Litigation ensued with Hoffman P.C. seeking a preliminary injunction to prevent Raftopol’s further employment with the competitor.

On its face, the court found the duration and geographic scopes of the non-compete restrictions to be reasonable and noted that other courts had upheld similar restrictive covenants.  However, the court also noted that such cases typically dealt with physicians working for competitors and, under such circumstances, courts have given wider latitude to restrictive covenants because they involve a professional of a learned profession whose services were considered to be “unique and extraordinary.”  Thus, the question in Hoffman became whether a restrictive covenant that would otherwise be reasonable against a physician was reasonable to protect Hoffman P.C.’s legitimate business interests against a physician’s assistant.

Hoffman P.C. argued the restrictions were reasonable against Raftopol because she built a relationship with patients and obtained trade secrets from Hoffman P.C.  Under those circumstances, the court noted that the restrictive covenant must be tailored “only to the extent necessary to protect the employer from unfair competition which stems from the employee’s use or disclosure of trade secrets or confidential customer lists.”  Columbia Ribbon & Carbon Mfg. v. A-1-A Corp., 42 N.Y.2d 496 (1977).  In this regard, the court found that there was little support in the record that Hoffman P.C. had any legitimate interest in preventing Raftopol from working with a competitor within 15 miles of Hoffman P.C.’s offices.  Specifically, the court held that Hoffman P.C. had not established that Raftopol had either the knowledge or power to impact the company’s profitability. There was also no support in the record for Hoffman P.C.’s contention that Raftopol could find similar employment outside of the restrictive area.

With respect to Hoffman P.C.’s concern that Raftopol could solicit patients whose information was otherwise unascertainable, Raftopol conceded that she would not solicit Hoffman P.C. patients but that the restrictions regarding employment with a competitor were causing her severe financial strain.  Given Raftopol’s concession regarding solicitation, the court ordered that Hoffman P.C.’s motion for a preliminary injunction was denied with the exception that Raftopol could not solicit Hoffman P.C.’s patients for the duration of the two-year period.

In this case, the court was able to narrow down the overly broad restrictive covenant to what was the actual, legitimate business interest of the employer which, in this case, was the solicitation of patients.  The court tailored a restriction that suited the employer’s needs while not preventing the former employee from employment.  While this court was amenable to crafting a tailored restriction, many courts will simply deny the motion for a preliminary injunction in its entirety if the restrictive covenants are too overreaching.  With that in mind, when these agreements are being drafted, it is critical for businesses to focus on what the business is really concerned about if this employee leaves the company – and it cannot be anything and everything involving the business.  With the continuing push to prohibit or limit these agreements, employers need to adapt and tailor their restrictive covenants to what is truly important to the business.

If the word “accountant” still brings to mind images of pocket protectors, thick glasses, and – well – nerds typing away on calculators, you haven’t met the team at Citrin Cooperman. If you’ve never heard the terms “accounting firm” and “entrepreneurial drive” in the same sentence, you also haven’t met the team at Citrin Cooperman. And if you’ve never heard of an accounting firm started in NYC with seed money from a legendary rock band, then you’ve definitely never met the team at Citrin Cooperman.

But if you haven’t, you should. Now the 23^rd largest CPA firm in the country, Citrin Cooperman has built a major presence as accountants and advisors over the past 38 years, operating 10 offices from Metro DC to Boston (plus an affiliate office in India), with 940 employees, including 40+ of them right here on Long Island. Michael Sabatini, Managing Partner of the Long Island office, recently invited CMM Managing Partner and HIA-LI Board Chairman Joe Campolo to tour the firm’s sleek new space in Melville, where they discussed everything from philanthropy to attracting millennial talent.

Citrin Cooperman has thrived by taking an entrepreneurial approach in helping their clients build their businesses. As Partner Corey Bell explains, “we become part of the client’s team.” Sabatini describes his team as down-to-earth people who care and who make it their mission to deliver value, whether through traditional tax and audit offerings or cybersecurity, valuation, and consulting services, among many others. With nearly a thousand professionals at their fingertips at Citrin Cooperman, clients also enjoy access to someone with the right expertise for their unique issues.

Citrin Cooperman’s sweet spot is servicing privately held family businesses in industries ranging from real estate to healthcare and everything in between – many of whom have outgrown their longtime accountants. Indeed, there’s no shortage of accounting advisors on Long Island, but Citrin Cooperman’s holistic approach – their tagline is “Focus on What Counts” – reflects their emphasis on serving as true business partners.

How does the firm foster this culture in new hires? “The tone is set from the top,” Sabatini says. And while many traditional accounting firms have found it difficult to adapt to changing times, Citrin Cooperman has demonstrated forward-thinking leadership by aggressively courting the millennial workers who represent the future of the firm – and investing in them once they’re on board. The new Melville office is a “millennial-focused space” designed with young people in mind: an open concept office with glass walls and an abundance of natural light. Amenities include an eat-in kitchen with lounge seating, tables and chairs, and large TVs – not to mention a nearby walking trail and a gym complete with a golf simulator in the building.

But more important than these modern features is the firm’s focus on keeping their younger talent engaged and excited. Case in point: rather than spend their days reviewing workpapers in a windowless office, young staff members work with partners on all aspects of the business, meeting face-to-face with clients and learning the ins and outs of their work. “Citrin Cooperman University” offers staff both technical training and culture-building; the office closes on Citrin Cooperman Cares Day for staff to volunteer together, giving time and dollars to the local community. The firm supports employees through wellness programs, flexible scheduling, professional development, women’s leadership training, and even an international exchange program – all of which have grown out of staff feedback, reflecting just how much the employee’s voice matters at Citrin Cooperman.  The firm has also put their relatively new HIA-LI membership to good use, building their Long Island presence and making important new connections that have already joined them as clients or staff.

With the firm’s rapid expansion, their approach to client service and staff investment is clearly paying off. As you walk down the green-accented hallways at Citrin Cooperman, you get the sense that there’s something unique about this accounting firm. As they promise, “Business isn’t boring; your advisor shouldn’t be either.”

Learn more at https://www.citrincooperman.com/.

 

  

Citrin Cooperman partners Corey Bell, Michael Sabatini (Long Island office Managing Partner), and Michael Myers welcome CMM Managing Partner Joe Campolo to their sleek new space in Melville. Next photo: No Conference Room 1 here. The conference room names in Citrin Cooperman’s new office pay homage to beloved Long Island destinations.

 

  

The millennial-friendly, open concept space features many amenities including a kitchen area with lounge seating, tables and chairs, and two big screen TVs. Next photo: The office incorporates the colors of Citrin Cooperman’s logo in unexpected places.

 

  

Michael Myers, Michael Sabatini, Joe Campolo, Corey Bell, and Michael Feller pose in the lounge area. Next photo: Citrin Cooperman: Focus on what counts.