New York State Non-Compete Law

A New York State non-compete law looks poised to be enacted.

State lawmakers in the summer of 2023 passed the non-compete bill, which would add New York to a growing number of states with such legislation.

Employment law observers expect the governor to sign the bill, but Gov. Kathy Hochul has not as of this writing. If signed, it would take effect 30 days later and not apply to non-competes entered into before that time.

Employment Law Compliance. Simplified.

New York State Non-Compete Law

At a high level, the New York State non-compete bill would create a new section of the state’s labor law and:

• Prohibit non-compete agreements and certain restrictive covenants
• Authorize covered individuals to bring a civil action against any employer or persons alleged to have violated a non-compete ban

As for definitions, the current version of the bill provides the following language on agreements and covered individuals.

Non-Compete Agreement

Any agreement, or clause contained in any agreement, between an employer and a covered individual that prohibits or restricts such covered individual from obtaining employment, after the conclusion of employment with the employer included as a party to the agreement.

Covered Individual

Any other person who, whether or not employed under a contract of employment, performs work or services for another person on such terms and conditions that they are, in relation to that other person, in a position of economic dependence on, and under an obligation to perform duties for, that other person.

Meanwhile, employers and their proxies would not be allowed to seek or accept a non-compete agreement from a covered individual. And civil action could be taken as long as two years after:

• A non-compete was signed
• When the person found out they are banned
• When the employer tries to enforce a non-compete

Damages of up to $10,000 could be assessed against violating employers, along with other compensation.

Still, there are exceptions under the proposed New York State non-compete law, including those related to trade secrets and fixed terms of service, and those barring former employees from soliciting an employer’s clients after they leave (if they found out about the clients during their time there).

Should the Empire State’s non-compete law go into effect, the state would join others that have passed similar laws of late, including California, Minnesota, North Dakota, Oklahoma, and Washington, D.C.

Employment Law Compliance

The days of a handful of federal employment laws for organizations to track are long gone.

And legislation continues to grow and evolve. It’s not simply labor law posters, minimum wage rates and paid leave laws.

From hair discrimination laws to protections for recreational marijuana use, large employers have plenty to consider. That spans hiring laws such as ban the box to payout of unused vacation time upon separation.

Plus, the rise of non-compete laws could be growing, as well.

Meanwhile, existing laws continue to be updated, whether through tweaks to language of statutes or government officials handing down additional guidance.

Lastly, there has also been a rise of class-action lawsuits in employment law, and the current presidential administration has been aggressive in investigating employers suspected of violations.

The complexities of employment law compliance have never been more challenging for employers.

Employment Law Compliance Resources

Conclusion

Employers with locations in New York State should keep an eye out for the potential passage of the state’s non-compete law.

Plus, HR teams and hiring managers may want to review their policies and agreements ahead of time. Again, the law as written would go into effect 30 days after receiving the governor’s signature.

This Employment Law News blog is intended for market awareness only, it is not to be used for legal advice or counsel.