On August 29, 2024, the First Department issued a decision in Perella Weinberg Partners LLC v. Kramer, 2024 NY Slip Op. 04349, upholding a non-solicitation provision, explaining:
The court properly granted plaintiffs’ Perella Weinberg Partners LLC and others’ motion for summary judgment to the extent of declaring that the personnel nonsolicitation covenant is enforceable. The enforceability of the personnel nonsolicitation clause is determined using the three-factor test from BDO Seidman v Hirshberg (93 NY2d 382 [1999]). The personnel nonsolicitation covenant is reasonable and therefore enforceable if it: (1) is no greater than is required for the protection of the legitimate interest of the employer, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public. A violation of any prong renders the covenant invalid.
Plaintiff financial services firm has sufficiently established that its personnel nonsolicitation clause satisfies all three factors of the BDO Seidman test. As to the first factor, an employer has a legitimate interest in enforcing a personnel nonsolicitation covenant if its employee has cultivated or developed personal relationships with clients through the use of the employer’s resources. In this case, plaintiff has sufficiently established that the employees solicited client relationships while employed by plaintiff and using plaintiff’s resources. Plaintiff submitted records showing that the solicited employees spent eight years working for plaintiff; that the solicited employees utilized expense accounts to support their work with plaintiff’s clients; that the solicited employees were tasked with forging relationships with plaintiff’s clients, and that these employees were paid substantial compensation by plaintiff to do so before they were terminated.
The court also properly found that the personnel nonsolicitation clause does not impose undue hardship on the employees and is not injurious to the public. To the extent that defendants argue that the clause is too broad to be enforced as written, the court has the power to sever and grant partial enforcement for an overbroad restrictive covenant.
(Internal quotations and citations omitted).