The Real Deal New York

WeWork revises non-compete agreements following settlement with NY AG

The company will release 800 employees in New York from the contracts
By Eddie Small | September 18, 2018 03:40PM

From left: Barbara Underwood and Adam Neumann (Credit: Twitter and Getty Images)

The New York Attorney General’s office has reached a settlement with WeWork over non-compete agreements which the company had required almost all its employees to sign.

The overly broad agreements barred employees from working for competitors after leaving WeWork regardless of their salaries, responsibilities and knowledge of confidential information, according to Attorney General Barbara Underwood. Her office’s investigation of the company found that it had made employees at almost all locations across the country sign one of these agreements as a condition of employment.

The settlement, which was first reported by NPR, will release 800 WeWork employees in New York from their non-compete agreements. WeWork will also adopt this policy nationwide, which will release more than 600 additional employees from the agreements. The state’s AG office worked with Illinois’ Attorney General, which had also been investigating WeWork’s non-compete agreements, to coordinate a resolution.

Additionally, roughly 1,800 employees — about 1,400 in New York — will now be bound by less restrictive non-compete agreements. Their non-compete period will drop from one year to six months after they stop working at WeWork, and the geographic restriction will drop from any place where the company operates to a 15-mile radius of WeWork branches that practice the type of work the employee did. Employees will also now only be barred from specific business lines in which they worked.

WeWork must notify all current and former employees who left within the past year about these changes and send the Attorney General’s office semiannual reports for the next two years about changes to or uses of its non-compete agreements.

Although New York allows non-compete clauses, they cannot be broader than necessary to protect the employer’s legitimate interests.

WeWork released a statement saying they had been working with the New York attorney general for the past two years to review the company’s non-compete agreements and was already revising them.

Underwood described the settlement in a statement as “a key step forward for WeWork’s thousands of employees in New York and across the country.”

Underwood’s office announced the settlement around noon on Tuesday, just three hours after WeWork announced it had become the largest office tenant in Manhattan with 5.3 million square feet of space. The company has 60 total locations in New York City, 50 of which are in Manhattan.

WeWork has signed multiple new leases in recent months, including 18,200 square feet at 231 11th Avenue and 25,000 square feet at 609 Greenwich Street. The company said its 258,344-square-foot lease at 21 Penn Plaza is what pushed it into the top spot.

New York City Public Advocate Letitia James won the Democratic primary for New York attorney general on Thursday. She will face Republican Keith Wofford in the November general election to replace Underwood, who took over the position from Eric Schneiderman in May.