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New York State Legislature Passes Bill Prohibiting Non-Compete Agreements

On June 20, 2023 the New York State Assembly approved Bill No. S311A. This bill prohibits an employer from entering into a non-compete agreement with an employee, independent contractor, or “any other person who, whether or not employed under a contract of employment, performs work or services” for the employer. These individuals would have a private cause of action against employers that violate the law. If employers are found to have violated the law, they will be subject to up to $10,000 in liquidated damages. The bill provides for a two-year statute of limitations, which is triggered when one of the following events occurs: (i) when the agreement was signed; (ii) when the covered individual learns of the prohibited agreement; (iii) when the employment or contractual relationship is terminated; (iv) or when the employer takes any steps to enforce the prohibited agreement. Bill S311A is currently before Governor Kathy Hochul, waiting for her signature. This law will become effective thirty (30) days after it is signed by Governor Hochul.

Bill No. S6748 was also approved by the New York State Assembly and awaiting Governor Hochul’s signature. Once Bill No. S6748 is enacted, employers will be prohibited from entering into non-compete agreements with workers, without a “good faith basis” to enforce the non-compete agreement. Under this bill, the definition of non-compete agreements will extend to any agreement that prohibits any individuals from seeking employment. Employers will also be required to repeal unenforceable non-compete agreements with current and former workers and give notice to each worker that the agreement is no longer valid. When signed by the Governor, this law will take effect immediately.

Please note that there is some resistance to enactment of these bills as many think they are overbroad and do not allow for any exceptions.

Contact PMP if you have any questions.


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