Currently, only California, Oklahoma, and North Dakota ban non-compete employment agreements. However, in recent years, non-compete agreements are facing great legislative and judicial scrutiny.
On June 20, 2023, New York’s State Assembly passed Bill A1278B which would be the broadest state ban yet, prohibiting all non-compete agreements regardless of salary. The breadth of the legislation is most evident in its definition section, which purposefully uses exceptionally broad language.
‘Non-compete agreement’ means 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.
‘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. See Bill A1278B.
As of today (November 20, 2023), the NY Governor has not signed the bill into law.
New York Governor Kathy Hochul only has until the end of this year to sign the bill and formally enact it as law. The bill poses several significant impacts. First, and most notably, the legislation would prohibit all future non-compete agreements in New York. However, the bill is only prospective, meaning all current non-compete agreements would be unchanged. Further, if enacted, the legislation would place substantial pressure on other states, especially New York’s neighboring states, to enact similar legislation so their workforces can remain competitive with New York. Similarly, the legislation would put pressure on the FTC to implement a uniform nationwide non-compete rule. The legislation would hold New York employers strictly liable for violating the prohibition, meaning courts would automatically assess liquidated damages of up to $10,000 against a business determined to be in violation.
If you need more guidance or information, contact the employment law attorneys at General Counsel, P.C. today at 703-556-0411, intake@gcpc.com, or use this Contact Us Form. Attorneys at General Counsel, P.C. specialize in labor and employment law and have experience working with businesses, non-profits, and individuals throughout the DC Metropolitan area and across Virginia, specifically in Fairfax County, Arlington, and Loudoun County.