Noncompete agreements would be limited or banned under these two bills

Noncompete agreements would be limited or banned altogether under two bills approved last week by the New York Senate. If the General Assembly agrees with that body, then the legislation will be sent to Gov. Kathy Hochul (D) for her signature to become law.

The bills could reach the governor’s desk as soon as this week, according to attorneys at Ogletree Deakins.

Nationally, an estimated 38% of workers have been subject to a noncompete agreement at some time in their careers, according to Government Accountability Office, but the agreements are “overly broad” and violate the National Labor Relations Act, according to National Labor Relations Board General Counsel Jennifer Abruzzo. 

In the Empire State, one pending bill, S3100A, “prohibits noncompete agreements and certain restrictive covenants; authorizes covered individuals to bring a civil action in a court of competent jurisdiction against any employer or persons alleged to have violated such prohibition.”

Covered individuals would include anyone who performs work or services for another, regardless of whether they are employed under a contract. 

“Covered individuals would have a private cause of action against employers that violate the law and, if found liable, employers would be subject to up to $10,000 in liquidated damages for each violation, as well as payment for lost compensation, damages, and attorneys’ fees and costs,” the attorneys at Ogletree Deakins said.

The legislation would become effective 30 days after being signed into law.

The second piece of legislation, S6748, “relates to actions or practices that establish or maintain a monopoly, monopsony or restraint of trade, and authorizes a class action lawsuit in the state anti-trust law.”

It would “prevent employers from entering into or maintaining noncompetition agreements with workers, including independent contractors, absent a ‘good faith basis’ to believe that a noncompete agreement is enforceable,” the attorneys said, noting that the bill does not expand on what constitutes a good-faith basis.

S6748 also would bar overly broad nondisclosure agreements and training-repayment obligations that could prevent workers from seeking other employment.

If enacted, the law would take effect immediately, the attorneys said.