New Bill Introduced to Ban Non-Compete Agreements in New York
A non-compete is a contract clause where one party—often an employee—agrees not to enter into a similar profession/trade as the other—often an employer—for a pre-specified period of time. On February 10th, 2025, a bill (S4641) was introduced into the New York State Senate that proposed a broad ban on non-compete agreements. Notably, this comes after a previous New York State effort to ban non-competes in 2023 and a federal effort in 2024 hit roadblocks. Here, our New York City non-compete attorney provides an overview of the proposed law.
Background: New York Governor Kathy Hochul Vetoed State’s Non-Compete Ban (2023)
First and foremost, it is important to note that New York lawmakers already passed legislation to ban most employee non-compete agreements in the state. In December 2023, New York Governor Kathy Hochul vetoed Senate Bill S3100A. That law would have prohibited all non-compete agreements in New York—without exceptions for highly compensated employees or for situations involving the sale of a business. Governor Hochul expressed concerns over the bill’s broad scope. As she vetoed it in its entirety, it did not become law. With that being said, when she announced her veto, she did express support for a more limited effort to restrict non-compete agreements in New York for middle class and lower-income workers.
Note: In April of 2024, the Federal Trade Commission (FTC) proposed a nationwide ban on most employee non-compete agreements for for-profit businesses. The regulation was initially scheduled to take effect in the fall of 2024. However, it was blocked by a federal court in Texas. A nationwide injunction was put in place. With the inauguration of President Donald Trump in January 2025, the new administration signaled a shift in policy priorities. Litigation over the federal non-compete is still ongoing, but the Trump Administration may withdraw the regulation without a court ruling.
Proposal Represents a Renewed Effort to Ban Non-Competes in New York State
In response to the 2023 veto and the stalled federal initiative, New York State Senator Sean Ryan introduced Senate Bill S4641. The proposed legislation was introduced in Albany on February 10th, 2025. The legislation seeks to prohibit non-compete agreements and certain other restrictive covenants. It would also authorize covered individuals to bring civil legal action against an employer who violates the proposed ban. Notably, the bill defines “covered individuals” as those earning less than $500,000 annually. Why does this matter? It would effectively exempt highly compensated individuals from the prohibition. In other words, it directly addressed one of the primary reasons why New York Governor Kathy Hochul said she vetoed the initial non-compete ban.
Consult With Our New York Employment Lawyer Today
At Poulos LoPiccolo PC, our New York City employment attorneys are skilled, knowledgeable, and solutions-focused advocates for clients. We have the experience you can trust. If you have any questions or concerns about non-compete agreement, please do not hesitate to contact us today. We provide employment law representation in New York City and beyond.
Source:
nysenate.gov/legislation/bills/2025/S4641/amendment/original
