NYC Kicking Around Proposed Bill to Ban Non-competes

On Feb. 28, 2024, in the latest attack on non-competes, the New York City Council introduced a bill that would ban all non-compete agreements between employers and workers in New York City. 

New York City's bill comes on the heels of a bill that would have banned most non-competes in the entire state. That bill was introduced in June 2023, but vetoed in December 2023 by New York Gov. Kathy Hochul. 

Gov. Hochul reportedly stated she supports banning non-competes for low- and middle-wage earners, but not for highly compensated workers. The bill that made it to Gov. Hochul's desk did not have such limitations, and she vetoed it. 

New York City's new bill prohibits employers from entering into any agreement with New York City workers that “prevents, or effectively prevents, the worker from seeking or accepting work for a different employer, or from operating a business after the worker no longer works for the employer.” The bill would apply to employees and independent contractors, and it would apply retroactively – employers would be required to rescind pre-existing non-competes. 

Piggybacking Gov. Hochul's reported comments at the end of last year, the New York City Council introduced two bill alternatives. One bill would 1) prohibit non-competes with low-wage employees and 2) require employers to provide notice to other non-low-wage employees at the time of hiring the employees may be subject to non-competes. The other bill would prohibit non-competes with freelance workers without providing an agreed-upon sum to the worker during the non-compete period. All three of these bills have been referred to subcommittee. 

New York City's attempt to ban non-competes is the latest attack on these agreements coming from municipalities, states, and federal regulators like the Federal Trade Commission and the National Labor Relations Board. If enacted, New York City's bill would have serious implications for employers. The bill is in its early stages, and it is not yet clear whether it will be passed. 

Big Apple employers should continue to pay close attention to the ongoing efforts in New York and on a federal level to ban or otherwise limit non-competes and should plan their restrictive-covenant strategies accordingly.