BILL NUMBER: S3100A Revised 7/13/23
SPONSOR: RYAN
 
PURPOSE OR GENERAL IDEA OF BILL:
The bill would update New York labor law regarding the permissible use
of non-compete agreements in employment contracts.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 adds a new section 191-d to the labor law.
Subsection 1: Defines "non-compete agreement" and "covered-employee."
Subsection 2: Provides that no employer or its agent, or the officer or
agent of any corporation, partnership, or limited liability company,
shall seek, require, demand or accept a non-compete agreement from a
covered employee.
Subsection 3: Voids non-compete agreements entered into after the effec-
tive date and prohibits employers from seeking such agreement.
Subsection 4: Provides that an employee, including a covered employee,
may bring a civil action in a court of competent jurisdiction against
any employer or persons alleged to have violated this section.
The employee shall bring such action within two years of the later of:
(i) when the prohibited non-compete agreement was signed; (ii) when the
employee learns of the prohibited non-compete agreement; (iii) when the
employment relationship is terminated; or (iv) when the employer takes
any steps to enforce the non-compete agreement.
The court shall have jurisdiction to void a non-compete agreement and to
order all appropriate relief.
Liquidated damages shall be calculated as an amount not more than ten
thousand dollars. The court shall award liquidated damages to every
affected employee in addition to other permitted remedies.
Subsection 5: Provides that this bill does not affect any other
provision of law affecting the ability of the employer to enter into an
employment contract or other written agreement that protects specif-
ically enumerated legitimate business interests with a prospective or
current employee.
Subsection 6: Creates a carve out for broadcast employees, such that
their existing non-compete protections will govern if all or part of
this bill is held to be invalid.
Section 2 contains a severability clause.
Section 3 sets the effective date (30 days after it shall have become a
law).
 
JUSTIFICATION:
Non-compete agreements have a negative effect on the labor market and
economy of New York State. They prevent workers from seeking employment
at entities that may be a better fit, and they provide employers from
providing more competitive benefits and wages, because their workforce
cannot seek employment elsewhere.
In certain industries, they can have a detrimental impact on consumers
as well. Non-compete agreements are prevalent in the medical field,
where they disrupt continuity of care.
Recently, the federal government has announced an interest in banning
such agreements nationwide via an FTC regulation. This bill would codify
such a ban in state law.
 
LEGISLATIVE HISTORY:
2021: S6425/A9591
 
FISCAL IMPLICATIONS:
None to the state.
 
EFFECTIVE DATE:
This act shall take effect on the thirtieth day after it shall have
become a law and shall be applicable to contracts entered into or modi-
fied on or after such effective date.