Non-Compete Agreements Can Be Crippling for Chefs

In March 2015, a young chef from Philadelphia named Adam Leonti signed an employment agreement to become executive chef of the Williamsburg Hotel and run its not-yet-opened vegetable- and grain-forward restaurant, Harvey. Leonti, who had spent eight years cooking for Marc Vetri, felt ready and excited for the next chapter — a move to New York, a chance to find his voice.

Today, nearly two and a half years later, Leonti is not making heirloom tomato salads at Harvey. Instead, he is marooned in Berlin, cooking at a supper club, waiting out the expiration of a noncompete clause, enforced by a judge in one of the rarest cases ever seen in the history of the hospitality industry.

What happened to Leonti is, depending on who you talk to, tragic or justified, but it began when Leonti signed a $130,000-a-year contract with a biting noncompete clause — a type of “restrictive covenant” which can be added to an employment agreement to restrict an employee from doing something. In Leonti’s case, the noncompete prohibited him from working at any food-service establishment in all of New York City for one year if he were to resign.

Leonti admits that he read and understood the noncompete clause. While he didn’t feel comfortable with how broad it was, after a year of chatting with owners Toby Moskovits and Michael Lichtenstein about the project, he felt comfortable enough to sign it anyway. “I trusted them and felt we were going to do this interesting project,” he says. “The owners were not willing to budge on the noncompete, and for me, the opportunity seemed worth it.”

As it turns out, maybe not. Leonti moved to New York in April 2015 eager to get things going with his restaurant. But its opening was put off week after week as the owners made repeated representations that the restaurant would open in a few weeks or a few months. It never did.

With the opening stalled, Leonti continued to draw a salary, but was getting restless. In December 2015, Leonti and the owners decided he should open the Bread Lab, where he made breads and pastries from hand-milled flour for hotel guests and the public. By February 2017, the restaurant still had not opened and Leonti was at the end of his rope. He quit via email.

Leonti knew he was taking a risk seeking employment elsewhere, but a lawyer advised him that noncompetes as broadly drafted as his were rarely enforced. He decided to chance it, hired a headhunter, and was brought on at Soho’s 60 Thompson Hotel in April, where owner John McDonald hoped he would reboot the hotel’s southern Italian restaurant, Sessanta.

What followed was a high-profile lawsuit in which the Williamsburg Hotel’s owners sued to enforce their noncompete, arguing that they invested “millions of dollars as well as time and effort, creating a following for its hotel and restaurant by promoting Mr. Leonti’s association with the restaurant and hotel.” They contended that Leonti was essentially unknown before moving to New York and that they enhanced his image and brand recognition with an extensive PR campaign making him the “face” of the hotel. They asked the judge to prevent him from working at Sessanta, a restaurant they claimed serves similar cuisine (Sessanta serves southern Italian food; Harvey was meant to be a vegetable- and grain-forward concept with an Italian sensibility).

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At first, the judge sided with Leonti, ruling that Harvey had not yet opened and that no harm was proven. The judge did keep the case “open,” ruling that the plaintiffs could come back and present their case again if and when Harvey opened. In August, plaintiffs returned, claiming breakfast was being served. In a 50-word opinion in which he didn’t reveal his reasoning, Justice Lawrence Knipel of the Brooklyn Supreme Court enforced the noncompete. Sessanta lost its chef and its chances (for now at least) of turning the restaurant around, and Leonti moved to Berlin to wait out his time. (Justice Knipel refused to comment for this story, as did the plaintiff’s attorney, Joshua Bernstein of Akerman LLP.)

The ruling is shocking to many in the legal and hospitality industries. Cases like these are extremely rare because most of them settle, says Roy Salins, partner in the employment group at Davis Wright Tremaine. He’s worked on cases related to the hospitality industry for 16 years and says he has never seen a case like this one go to court in New York.

There have been lawsuits involving chef noncompetes, but in other cities. In Houston this May, a former executive chef at an upscale seafood restaurant filed a suit accusing his ex-employer of not letting him out of what he argues is an unenforceable noncompete agreement after turning the venue into a Tex-Mex eatery. And in 2013, the St. Petersburg, Florida, restaurant Three Birds Tavern successfully enforced a noncompete against its former chef, Domenica Macchia, who left and began working as the chef at another local restaurant.

Salins explains that New York state law will enforce noncompetes provided the agreement is proven to protect a legitimate business interest, such as trade secrets or proprietary information. A court will also want to see that the noncompete is narrowly tailored to only protect that interest, in terms of geography and time; those restrictions must be deemed “reasonable” — a one-year time frame is usually reasonable, and clearly, the judge in this case thought all of NYC was, too. “All of these cases are extraordinarily fact specific and there is not a one-size-fits-all formula,” Salins says.

Salins explains that the judge could have “blue penciled” the noncompete, a process that modifies its scope and tailors it to correct the ways in which it overreaches and yet still protects the legitimate business interest of the former employer. “The court could have said, He can’t work for any other Williamsburg restaurant, or any other Italian restaurant, but he let the entire provision stand — any other food service business in New York City. That is certainly a broad holding.”

Mike Hewitt, founder of the hospitality recruitment agency One Haus, agrees that the Leonti case is a red flag. “Given that the judge enforced this noncompete, I would advise my clients to be very wary of the commitments they agree to.” Also, he advises clients to be prepared to walk away. “We have lost deals because of noncompetes that were way too restrictive,” he says. With the shortage of talented chefs in the marketplace, this is a certainly a valid strategy.

Hewitt says he prefers clauses that are narrowly tailored in terms of sector, geography, and time frame. “We want to see something that says, ‘No Italian restaurants below 14th Street for one year,’” he says. “Anything else is a deterrent for hire.”

Salins says the case is especially significant because noncompetes are becoming more common. “Chefs are becoming the face of the business,” he says. “When the only reason people are coming to your restaurant is the chef, losing the chef becomes irreparable harm. If he or she opens across the street or in the area, that could greatly affect the business. That sort of harm means a judge will likely enforce the noncompete.”

Kate Edwards, a restaurant consultant with 20 years of experience, sees this case as a reason for serious reflection. “As a chef, you need to think about who you are and what you want the direction of your career to be,” she says. “If you want to come to New York for a few years and then go back to where you came from, then sign a noncompete like that one. But if you want to build a reputation in a city, don’t sign a noncompete that prevents you from working anywhere in NYC.”

Edwards also suggests that prospective employees look at a contract like a marriage, not a casual affair. “You need to spend a lot of time with each other before you get in bed with someone,” she says. “Get to know them, meet their families, do things that are business-related and non-business-related. Think about things like, do you feel inspired by one another? You have to do your due diligence and know that there is magic when people combine and collaborate, but you have to be the right collaborators for that happen.”

As for Sessenta’s owner McDonald, he’s as perplexed as he is irate. “There are no trade secrets, because [Leonti] didn’t develop any recipes for them,” he says, speaking to what may have inspired the judge’s ruling. “We have a completely different concept in a different borough... I have never unfairly tried to prevent any chef or employee from earning a living, so why the hotel feels driven to hurt a chef who stuck it out for years while they repeatedly did not open is beyond me." McDonald is appealing the verdict.

Meanwhile, Leonti remains in Berlin, where he is cooking at a supper club overlooking the remnants of the Berlin Wall until March 1, when he is permitted to return to work at Sessanta. “I am a chef,” he says. “I have to be active. I waited for two years to open Harvey. But I didn’t move to New York to sit in an empty building.” Harvey is still not taking dinner reservations.

Andrea Strong, founder of the pioneering food blog the Strong Buzz, has been writing about restaurants and food for the past 18 years. Gracey Zhang is an illustrator and animator based in New York.
Editor: Erin DeJesus