New York State appears set to join the growing number of jurisdictions prohibiting or significantly limiting the use of employment non-compete agreements. The Empire State’s non-compete ban (Bill No. S3100A), which was recently passed by both chambers of the New York State legislature — and which appears to be headed toward Governor Hochul’s signature — represents yet another in a series of recent movements toward restricting non-compete agreements.

For example, as we reported in January, the Federal Trade Commission announced a proposed regulation that, if adopted, would abolish non-competes across the U.S. Likewise, a number of states have implemented barriers to non-compete agreements, including, for example, imposing minimum income thresholds for enforceability of such agreements.

This article explores the New York bill’s key provisions and implications.

Key Provisions — Full Ban on Non-Competes, with Significant Penalties

1. Non-Compete Prohibition: The bill prohibits non-compete agreements for service providers. The bill defines a “non-compete agreement” to mean “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 the employer included as a party to the agreement.” The bill is drafted to be inclusive of “any . . . person who . . . performs work or services for another person,” meaning that it is likely to apply...

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