The New York state legislature passed a bill this week banning non-compete agreements for all workers, joining a growing number of states restricting such activity. The bill, S3100A/A1278, would ban the use of non-compete agreements in every circumstance.
- Unlike the FTC’s near-total ban, the New York bill does not explicitly provide for any exceptions. However, language in the bill defining covered individuals could provide for exceptions in the case of business sales, although it is currently unclear.
- The law will only prohibit non-competes entered into after the law’s effective date.
- Finally, the bill would provide employees with a statutory right to bring civil actions against employers who attempt to require or enforce non-compete agreements.
The bill passed both chambers of the New York state legislature and is expected to be signed into law by Governor Kathy Hochul (D). The law would become effective 30 days after the Governor’s signature.
Four states and DC prohibit non-competes: New York will join California, North Dakota, Oklahoma, and Minnesota as states banning non-compete agreements. The District of Columbia also prohibits non-compete agreements for employees making less than $150,000 a year, while several other states are considering similar bans or increased restrictions.
Outlook: The FTC aims to finalize its rule banning non-compete agreements nationwide by next spring, while Congress mulls two separate bills, one that would ban non-competes for all workers and the other that would ban them for those earning below a certain salary threshold, respectively.
