On June 20, 2023, the New York State Assembly approved one of two bills concerning non-compete agreements that the New York State Senate just recently passed. Bill No. S3100A, which would prohibit employers from using non-compete agreements, passed the Assembly and is on its way to the desk of Governor Hochul for signature.
Quick Hits
- The New York State Assembly approved legislation (Bill No. S3100A) that would prohibit employers from using non-compete agreements.
- Bill No. S3100A does not address employee or client non-solicitation agreements, suggesting such provisions might not be affected by the new law.
- Bill No. S3100A would become effective thirty days after being signed into law.
- It is unclear how the bill would apply to non-compete agreements entered into prior to its effective date, as the new language states that “[e]very contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”
The legislation would prohibit 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. S3100A grants covered individuals a private cause of action. If found liable, employers may be subject to liquidated damages of up to $10,000 for each violation, payment for lost compensation, damages, attorneys’ fees, and costs.
Ogletree Deakins’ New York office will continue to monitor developments and will provide updates on the New York and Unfair Competition and Trade Secrets blogs as additional information becomes available.
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