The New York legislature has passed a bill banning future employee non-competes, regardless of pay thresholds or job functions, and even in the sale-of-business context.

TAKEAWAYS

• The bill allows limited customer non-solicitation provisions if the covered individual learned about the customer during their employment.
• The bill creates a private right of action and mandatory liquidated damages of up to $10,000.
• The ban, which is not retroactive, is set to take effect 30 days after the Governor signs it.

On June 20,2023, the New York State Assembly passed a bill banning employee non-competes (A01278) in New York. The New York State Senate had already passed the companion bill (S3100A) earlier this month. If signed by Governor Hochul, the bill will take effect 30 days thereafter.

If the bill is enacted, New York would become the fifth state to generally prohibit employee non-compete agreements, following California, North Dakota, Oklahoma and Minnesota (which passed a similar bill, S.F. 3035, just a few weeks ago). Eleven states and the District of Columbia currently restrict employers' ability to require non-exempt employees and/or employees earning below a certain statutory minimum salary from signing non-compete agreements without fully banning such agreements.

This potential change in New York state policy coincides with a federal movement in the same direction: in January, the Federal Trade Commission (FTC) published a proposed rule for a nationwide ban on non-compete...

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