Prohibits non-compete 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.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1278B
SPONSOR: Joyner TITLE OF BILL:
An act to amend the labor law, in relation to prohibiting non-compete
agreements and certain restrictive covenants
PURPOSE OR GENERAL IDEA OF BILL:
To amend the Labor Law regarding the permissible use of non-compete
agreements in employment contracts.
SUMMARY OF PROVISIONS:
Section 1 would a new Section 191-d to the Labor Law.
The bill would define relevant terms, including "non-compete agreement"
and "covered-individual" and provide that no employer or its agent, or
the officer or agent of any corporation, partnership, or limited liabil-
ity company, shall seek, require, demand or accept a non-compete agree-
ment from a covered individual.
The bill would void current non-compete agreements and prohibit employ-
ers from seeking such agreements, and provide that covered individuals
may bring a civil action in a court of competent jurisdiction against
any employer or persons alleged to have violated this section.
The bill would provide that such provisions would not affect any other
provision of law relating to 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.
The bill would apply notwithstanding section 202-k of the labor law
affecting broadcasting industry employees, and the provisions of that
section would remain in effect in the event that any part of this bill
be adjudged as invalid.
Section 2 would provide a severability clause. Section 3 would set the
effective date.
DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE):
Definitional changes to broaden scope of bill to apply to persons in
position of economic dependence.
Clarifies that nothing in the section should be interpreted to constrain
an employer from entering into agreements relating to the disclosure of
trade secrets, proprietary client information, or solicitation of
clients.
Clarifies that the bill applies to section 202-k of the labor law
affecting broadcast industry employees, and that section shall remain in
effect should this bill or an part of it be found invalid.
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:
2021-2022: A9591/S6425 - Referred to Labor
FISCAL IMPLICATIONS:
None to the State.
EFFECTIVE DATE:
This bill would take effect on the thirtieth day after it shall have
become law and would be applicable to contracts entered into or modified
on or after such effective date.
