{"id":2341,"date":"2025-03-03T16:28:24","date_gmt":"2025-03-03T16:28:24","guid":{"rendered":"https:\/\/forework.com\/?p=2341"},"modified":"2025-03-03T16:28:28","modified_gmt":"2025-03-03T16:28:28","slug":"new-york-state-legislature-considering-bill-to-ban-employment-non-compete-agreements","status":"publish","type":"post","link":"https:\/\/forework.com\/new-york-state-legislature-considering-bill-to-ban-employment-non-compete-agreements\/","title":{"rendered":"New York State Legislature Considering Bill to Ban Employment Non-Compete Agreements"},"content":{"rendered":"\n<p>On February 10, 2025, New York State Senator Sean Ryan introduced Senate Bill S4641, which seeks to broadly prohibit the use of non-compete agreements in employment contracts. The proposed ban aligns with a growing national trend aimed at limiting non-compete agreements, particularly in the healthcare sector, where such restrictions have been criticized for limiting workforce mobility. Sen. Ryan previously sponsored a similar bill in 2023, which the legislature passed. However, Gov. Hochul vetoed that measure, citing concerns over its broad scope and potential economic consequences.<\/p>\n\n\n\n<p><strong>Key Provisions of S4641<\/strong><\/p>\n\n\n\n<p>The bill introduces several key definitions under a newly proposed Section 191-d of New York\u2019s Labor Law:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Non-compete agreement<\/strong>: Defined as \u201cany 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.\u201d This definition is limited to true non-compete agreements and does not extend to other restrictive covenants such as confidentiality or non-solicitation agreements.<\/li>\n\n\n\n<li><strong>Covered individual<\/strong>: Refers to any worker who is economically dependent on an employer, regardless of whether they are employed under a formal contract. However, this category excludes highly compensated individuals.<\/li>\n\n\n\n<li><strong>Highly compensated individual<\/strong>: Defined as any person earning an average annualized cash compensation of $500,000 or more, calculated using the individual\u2019s three most recent W-2 and K-1 statements. If the person has been employed for less than three years, the calculation is based on the entire duration of their employment.<\/li>\n\n\n\n<li><strong>Health-related professional<\/strong>: Encompasses a wide range of medical practitioners licensed under New York law, including physicians, physician assistants, chiropractors, dentists, veterinarians, pharmacists, nurses, psychologists, and mental health practitioners.<\/li>\n<\/ul>\n\n\n\n<p><em>Prohibitions on Non-Compete Agreements<\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Under Section 191-d, employers and associated entities\u2014including corporations, partnerships, limited liability companies, and not-for-profit organizations\u2014would be prohibited from seeking, requiring, demanding, or accepting non-compete agreements from any covered individual or health-related professional.<\/li>\n\n\n\n<li>Any non-compete agreements entered into after the effective date of the law would be deemed null, void, and unenforceable.<\/li>\n<\/ul>\n\n\n\n<p><em>Private Right of Action<\/em><\/p>\n\n\n\n<p>The bill grants covered individuals the right to file a civil lawsuit against any employer or entity that attempts to enforce a prohibited non-compete agreement.<\/p>\n\n\n\n<p>The statute of limitations for bringing such a lawsuit would be two years, starting from the later of the following events:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The date the non-compete agreement was signed.<\/li>\n\n\n\n<li>The date the individual first becomes aware of the agreement.<\/li>\n\n\n\n<li>The date of termination of employment or contractual relationship.<\/li>\n\n\n\n<li>The date the employer attempts to enforce the non-compete agreement.<\/li>\n<\/ul>\n\n\n\n<p>Courts would have the authority to invalidate non-compete agreements and issue remedies that may include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Injunctive relief preventing the enforcement of the agreement.<\/li>\n\n\n\n<li>Liquidated damages of up to $10,000 per affected individual.<\/li>\n\n\n\n<li>Compensation for lost wages, damages, and attorney\u2019s fees.<\/li>\n<\/ul>\n\n\n\n<p><em>Exceptions and Carve-Outs<\/em><\/p>\n\n\n\n<p>While the bill broadly prohibits non-compete agreements, it does include several exceptions:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Employers would still be permitted to enter into agreements that:\n<ul class=\"wp-block-list\">\n<li>Establish fixed terms of employment or require exclusivity during the term of employment.<\/li>\n\n\n\n<li>Protect trade secrets and other confidential information.<\/li>\n\n\n\n<li>Restrict employees from soliciting clients of their former employer.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The bill also exempts non-compete agreements related to the sale of a business. Specifically, individuals who sell the goodwill of a business, transfer a majority ownership interest, or own at least 15% of a business may still be subject to enforceable non-compete clauses.<\/li>\n\n\n\n<li>The law would not override existing protections under Section 202-k of New York\u2019s Labor Law, which already bans non-compete agreements for certain employees in the broadcast industry.<\/li>\n<\/ul>\n\n\n\n<p><em>Severability<\/em><\/p>\n\n\n\n<p>The bill includes a severability provision, ensuring that if any part of the law is found to be invalid, the remaining provisions would still be enforceable.<\/p>\n\n\n\n<p><strong>Key Differences From the 2023 Bill<\/strong><\/p>\n\n\n\n<p>The latest version of the bill makes several changes in response to concerns outlined in Gov. Hochul\u2019s veto memo from December 2023:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Inclusion of a salary or compensation minimum threshold (the \u201chighly compensated individual\u201d).<\/li>\n\n\n\n<li>Inclusion of a carve-out for the sale of a business.<\/li>\n\n\n\n<li>Omission of language identical to California\u2019s Business &amp; Professions Code \u00a716600.<\/li>\n<\/ul>\n\n\n\n<p><strong>Next Step for Employers<\/strong><\/p>\n\n\n\n<p>If the bill is passed by the New York State Legislature, it will be sent to Gov. Hochul, who will have three options:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Sign the bill into law, enacting the ban on most non-compete agreements.<\/li>\n\n\n\n<li>Veto the bill, as she did in 2023.<\/li>\n\n\n\n<li>Negotiate amendments through the chapter amendment process to address remaining concerns.<\/li>\n<\/ul>\n\n\n\n<p>We expect intense lobbying efforts for and against the bill, as happened in 2023. We recommend employers stay on top of such legislative developments.<\/p>\n\n\n\n<p>If you have any questions regarding non-compete agreements and this proposed bill, please feel free to contact Forework HR representative.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>On February 10, 2025, New York State Senator Sean Ryan introduced Senate Bill S4641, which seeks to broadly prohibit the use of non-compete agreements in employment contracts. The proposed ban aligns with a growing national trend aimed at limiting non-compete agreements, particularly in the healthcare sector, where such restrictions have been criticized for limiting workforce &hellip;<\/p>\n","protected":false},"author":1,"featured_media":2342,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","content-type":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-2341","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-employment-articles"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>New York State Legislature Considering Bill to Ban Employment Non-Compete Agreements - Forework<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/forework.com\/new-york-state-legislature-considering-bill-to-ban-employment-non-compete-agreements\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"New York State Legislature Considering Bill to Ban Employment Non-Compete Agreements - Forework\" \/>\n<meta property=\"og:description\" content=\"On February 10, 2025, New York State Senator Sean Ryan introduced Senate Bill S4641, which seeks to broadly prohibit the use of non-compete agreements in employment contracts. 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