HR Alert: New York’s proposed ban of non-compete agreements – what does it mean?

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  • HR Alert: New York’s proposed ban of non-compete agreements – what does it mean?

The New York Assembly recently passed a bill to entirely ban the use of non-compete agreements. The bill seemingly was introduced in response to the FTC’s proposed rule regarding non-compete agreements that was released in January of this year. The FTC defines a non-compete agreement as “a contractual term between an employer and a worker that blocks the worker from working for a competing employer, or starting a competing business, typically within a certain geographic area and period of time after the worker’s employment ends.”

If enacted, New York’s bill would amend the Labor Law to ban non-compete agreements for most employer-employee relationships in the State. On its face, the bill’s ban on non-compete agreements applies to both independent contractors and W-2 employees. The proposed bill may also mean an end to exclusivity contract terms, no longer allowing employers to restrict employees from taking on secondary employment.

The proposed bill also creates a private right of action which would prohibit more litigation against employers. Those claiming a violation of the law would be required to file suit within two years of when:

  • The prohibited non-compete was signed.
  • The individual learns of the prohibited non-compete.
  • The employment or contractual relationship ends, or
  • The employer attempts to enforce the non-compete, whichever is later.

If a violation exists, a court would be entitled to void the non-compete agreement and impose compensatory damages such as lost compensation, damages, and attorneys’ fees, but any liquidated damages awarded can’t exceed $10,000.

The proposed law doesn’t prohibit the use of contract terms that establish a fixed term of service, agreements that prevent the disclosure of trade secrets, confidential or proprietary client information, or customer non-solicitation agreements, and it will be prospective, not retroactive.

While the proposed law is just that – and is not effective or enforceable in New York yet – it bears notice given the pro-employee focus of both New York’s and the federal government. If you’re a human resources professional or entrepreneur with questions about this or other compliance issues, don’t hesitate to reach out at 716.839.9700 or

Lisa Coppola

Written by Lisa Coppola

Founder of The Coppola Firm

Lisa A. Coppola, Esq. understands the challenges her clients face, whether they’re starting a new business, taking their existing operations in a new direction, or facing a claim or threat.

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