The New York State Assembly passed a bill on June 20, 2023, which, if signed by New York Governor Kathy Hochul, will impose a blanket ban on—and render unlawful—all future noncompete agreements. New York’s proposed law is the most recent crackdown on the enforceability of noncompetes amid a wave of federal and state efforts to limit such agreements or prohibit them outright.
The Bill
If enacted, the law will prohibit New York employers from entering into post-employment noncompete agreements with any worker, regardless of the worker’s position, classification, or salary. Accordingly, the law broadly defines a noncompete agreement 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 the employment.” In turn, the law defines a “covered individual” as “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.” This definition suggests that both employees and certain independent contractors are protected by the law.
Importantly, the law only applies to “contracts entered into or modified on or after” the law’s effective date. Therefore, the law will not apply to noncompete...
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