A few years ago, I wrote an article regarding New York and federal efforts to impose restrictions on non-compete agreements in employment. While efforts to limit the use of non-compete agreements have been widespread, their current legal impact has been negligible. On the federal level, the Trump administration abandoned the Biden administration’s attempts to prohibit non-competes nationwide, opting instead to focus on a case-by-case approach. However, after several attempts, it appears that recent legislation in New York may finally break through.
In 2023, Governor Kathy Hochul vetoed legislation that would have prohibited all non-compete agreements in New York. Governor Hochul identified a few reasons for her veto. Foremost was the lack of any carve-outs to the total ban on non-competes. For example, the legislation did not contain a salary threshold above which non-compete agreements would be permissible and enforceable. While non-compete agreements may not be appropriate for middle-class or low-wage workers, they may be appropriate for C-suite executives or other highly compensated employees and for certain business sale situations. Recent legislation appears to directly respond to Governor Hochul’s concerns.
On January 28, 2026, Bill A10023 was introduced in the New York State Assembly. It mimics Bill 4641-A, which was passed by the New York State Senate in 2025.
These bills propose to prohibit most non-compete agreements between employers and employees. Excluded from the prohibition are non-competes for “highly compensated individuals” (those earning more than $500,000 per year). Under these bills, this threshold would be adjusted annually based on increases in the Consumer Price Index for all Urban Consumers for New York State.
Another notable exclusion is for “health related professionals,” which includes veterinarians. The legislation, if enacted, would preclude the use of non-compete agreements for all veterinarians, regardless how much money they earn. Any non-compete agreements entered after the effective date would be null, void and unenforceable.
A few other points to note in the legislation:
- These bills would permit employees to sue their employers for violations. Prevailing employees may recover liquidated damages of up to $10,000, lost compensation, compensatory damages, and reasonable attorneys’ fees and costs.
- These bills would not preclude the use of non-compete provisions tied to certain business transactions, such as the sale of a business’s goodwill or ownership.
- Some restrictive provisions (like confidentiality or client non-solicitation agreements) may remain enforceable if they do not otherwise restrict competition in violation of these bills.
- Any non-compete provisions permitted under these bills would still have to satisfy the familiar reasonableness standards (i.e., limits on time, geography, and scope, not impose an undue hardship on the employee, not harm the public, and protect the employer’s legitimate business interests). Additionally, non-compete provisions would be limited to one (1) year.
- If an employer enforces a non-compete permitted under this bill, the employer would have to pay the employee’s salary during the period of enforcement.
- All employers would be required to inform their employees of the protections and rights provided under these bills by posting a notice in a conspicuous, easily accessible place customarily frequented by employees.
While these bills aim to significantly restrict an employers’ ability to use non-competes in New York, they are not a sweeping mandate prohibiting all non-compete agreements. When presented with an agreement that contains restrictive covenants, it is important to consider the current state of the law.