Will New York Ban All Non-Compete Agreements?

The New York legislature passed a statute on June 20, 2023 that, if signed into law by the Governor, will ban all forms of non-compete agreements in that state, including not only with employees but apparently also in connection with the sale of a business. The statute would be effective 30 days after being signed by Governor Hochul.

If the New York statute is signed into law, New York then becomes the 5th state to completely ban non-compete agreements with employees, after California, Minnesota, North Dakota and Oklahoma. In addition, New York would be the only state that does not have an express exception that legitimizes non-competes in the context of the sale of a business.

Lobbyists are hard at work trying to influence the Governor's decision. Governor Hochul may take action to place the bill on her desk for action anytime between now and December 31 of this year. Alternatively, the Governor can request that the sponsors of the legislation negotiate changes and then re-pass the legislation for her signature as modified. A compromise that would allow some non-compete agreements above a wage or compensation threshold or limited to certain occupations is possible, as happened in Illinois, Massachusetts, Washington and the District of Columbia recently.

New York state's action will likely have a strong influence on other states and the use of non-compete agreements in general.

Meanwhile, the FTC is still considering a nationwide ban on non-compete agreements for employees. The comment period on the proposed FTC ban ended in April, 2023.