What's happening
This bill limits the enforceability of non-compete and non-solicitation agreements in New York, favoring employee mobility and open competition.
Why it matters
Makes most non-compete and non-solicitation agreements unenforceable. unless the departing employee or contractor is highly unique (i.e., possesses trade secrets or confidential information), or has bought/sold part of the business, or is a "learned professional" under certain conditions. This limits employers’ ability to broadly restrict where ex-employees can work.
Protects employees’ ability to change jobs and pursue their livelihood. , unless the employer can prove a compelling and specific business need (such as safeguarding actual trade secrets), shifting the burden of justification away from workers.
Explicitly prohibits non-compete agreements for attorneys. , ensuring clients retain the right to choose their legal counsel and preventing law firms from restricting lawyers’ post-employment opportunities.
Introduces a strong presumption in favor of open competition and employee mobility. , but allows limited exceptions only if the employer can demonstrate both that the restriction is narrowly tailored and that there are unusual, compelling business interests at stake—raising the legal standard for enforceability.
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Who cares
Headline styles
Limit Noncompete Agreements
Plain English, a few words. Used as the page title.
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History
- Referred to labor
- Referred to labor
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2581
2017-2018 Regular Sessions
IN ASSEMBLY
January 20, 2017
Introduced by M. of A. STECK -- read once and referred to the Committee on Labor
AN ACT to amend the labor law, in relation to the state policy against restraint of trade
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The labor law is amended by adding a new article 33 to read as follows:
ARTICLE 33
POLICY AGAINST RESTRAINT OF TRADE Section 950. Policy.
951. Particular restraints of trade unenforceable.
952. Covenants relating to attorneys.
953. Exceptions.
§ 950. Policy. The legislature hereby reaffirms that the policy of this state is to disfavor restrictive covenants in employment as constituting a restraint of trade.
§ 951. Particular restraints of trade unenforceable. A covenant not to compete, or non-solicitation agreement with respect to either employees or customers, shall not be enforceable against a former employee no longer employed by a business or independent contractor no longer in a contractual relationship with the business, unless (1) the covenant is reasonable in geographic extent or in time based on the circumstances of the case and (2) one of the following is true:
(a) Such employee or independent contractor left the business voluntarily or was involuntarily terminated or discharged for misconduct; and such employee or independent contractor is unique as a matter of law. An employee or independent contractor is considered unique if and only if he or she possesses trade secrets of the business or confidential material that is akin to a trade secret.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD07670-01-7
A. 2581 2
(b) Such employee or independent contractor has purchased or sold any portion of the business. Such employees are deemed to have left the business voluntarily.
(c) Such employee or independent contractor is a learned professional. Provided, however, that covenants involving learned professionals are not enforceable if such learned professional was involuntarily terminated or discharged for reasons other than misconduct.
§ 952. Covenants relating to attorneys. Any such covenants regarding attorneys, whether as employees or independent contractors, are unenforceable in light of the client's right to choose his or her own counsel.
§ 953. Exceptions. Such restrictive covenant may still be enforced if the employer demonstrates that (1) the employee left its business voluntarily or was terminated or discharged for misconduct; and (2) there are unusual circumstances unique to the business and to the employee involved such that the employer has a compelling interest that outweighs the employee or independent contractor's interest in being able to pursue his or her livelihood and the public interest in free and open competition; and (3) such restrictive covenants shall be enforced only to the extent necessary to protect the employer's compelling interest.
§ 2. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.