On June 7, 2023, the New York State Senate passed Bill No. S03100 (the “Bill”), which would amend the New York Labor Law to prohibit employee non-compete agreements in New York.

Specifically, the language of the bill provides as follows:

“No employer or its agent, or the officer or agent of any corporation, partnership, limited liability company, or other entity, shall seek, require, demand or accept a non-compete agreement from any covered individual.”

The bill defines a “covered individual” as follows:

“Covered individual” means 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.

A “non-compete agreement” is defined as 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.

Notably, the Bill does not affect the ability of an employer to enter into an agreement  with  a prospective or current covered individual that establishes a fixed term of service or prohibits disclosure of trade secrets, disclosure of confidential and proprietary client information, or solicitation of clients of the employer that the covered individual learned about during employment.

The Bill provides a private right of action for individuals who are subject to a prohibited non-compete, against an employer that “seek[s], require[s], demand[s], or accept[s] a non-compete from any covered individual,” and courts can order injunctive relief, liquidated damages up to $10 thousand per violation, and compensatory damages, including lost compensation and attorneys’ fees and costs.

The Bill is currently pending before the New York State Assembly.  If passed in the Assembly, the Bill will move to New York Governor Kathy Hochul, who will have ten days to sign the Bill into law (which is expected), or to veto the Bill.

We will continue to monitor the status of the Bill and will provide updates on further developments.  Should you have any questions, please contact Ali Law Group.

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