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Prohibits non-compete agreements
(D, WF) Senate District
| Assembly Actions - Lowercase Senate Actions - UPPERCASE | |
|---|---|
| Jul 22, 2022 | recommit, enacting clause stricken |
| Jan 05, 2022 | referred to labor |
| Jan 06, 2021 | referred to labor |
Law Section: Labor Law Laws Affected: Add §191-d, Lab L Versions Introduced in 2019-2020 Legislative Session: S8274
Prohibits non-compete agreements; provides that a non-compete agreement is only enforceable if such agreement: is no greater than required for the protection of the legitimate interest of the employer; does not impose an undue hardship on the employee; is not injurious to the public
BILL NUMBER: S734 SPONSOR: BIAGGI TITLE OF BILL: An act to amend the labor law, in relation to prohibiting non-compete agreements PURPOSE OR GENERAL IDEA OF BILL: To limit the use of non-compete clauses and protect workers who lose their jobs due to an emergency situation. SUMMARY OF SPECIFIC PROVISIONS: Section 1 amends the labor law by adding a new section 191-d to define non-compete agreements and specify the conditions in which they are enforceable. Section 2 sets forth the effective date.
JUSTIFICATION: Non-compete agreements are becoming increasingly common across all industries. According to a 2019 estimate by the Economic Policy Insti- tute, 44% of workplaces in New York State require at least some employ- ees to sign non-compete agreements.(1) Non-competes agreements, which are designed to keep employees from going to work for a competitor, used to be required primarily for high paid Executives to prevent them from sharing proprietary information. However, more and more low wage workers are now subject to non-compete clauses. For example, until 2016, Jimmy Johns required employees to sign non-compete agreements that prevented them from working at a competitor or any store that earned 10% or more of its revenue from sandwiches within a two mile radius of any Jimmy John's location for two years after they left the company. These agreements make it harder for workers to find new jobs and, by extension, limit worker's ability to look for better pay and working conditions. New Yorkers across industries have lost their jobs overnight as businesses have had to close or face financial difficulties in the wake of COVID-19. When NY PAUSE ends, there is no guarantee that every business will reopen or be able to rehire their employees. New York State must ensure that workers who are already facing significant economic hardship are not limited in their employment opportunities. Non-compete agreements are not currently governed by statute or regu- lation in New York State. However, New York State courts have adopted the common-law standards of reasonableness for non-compete agreements. To be enforceable, a non-compete must meet the following requirements: (1) the agreement is no greater than is required for the protection of the legitimate interest of the employer, (2) does not impose undue hard- ship on the employee, and (3) is not injurious to the public. If any of these conditions are violated, the agreement is void. Although non-com- petes are only narrowly enforceable in New York State, the burden falls on employees to challenge the agreement in court. For low-wage workers especially, challenging their employer in court is not an option. More- over, workers are unlikely to know if their non-compete is enforceable and may be dissuaded from seeking certain jobs out of fear that a former employer will try to enforce their non-compete. This legislation defines non-compete clauses and codifies the existing criteria used by courts to determine the enforceability of non-compete clauses. It further clari- fies that undue hardship includes, but is not limited to situations where a worker loses or leaves their job due circumstances surrounding a declared state of emergency. This definition is not designed to limit or narrow the existing interpretation of undue hardship, but make clear that companies may not enforce any non-compete agreements signed by employees who lost jobs due COVID-19. PRIOR LEGISLATIVE HISTORY: 2020: S8274/A10511 - Died in Labor FISCAL IMPLICATIONS: None. EFFECTIVE DATE: Immediately. (1) https://www.epi.org/publication/noncompete- agreements/
S T A T E O F N E W Y O R K ________________________________________________________________________ 734 2021-2022 Regular Sessions I N S E N A T E (PREFILED) January 6, 2021 ___________ Introduced by Sen. BIAGGI -- read twice and ordered printed, and when printed to be committed to the Committee on Labor AN ACT to amend the labor law, in relation to prohibiting non-compete agreements THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The labor law is amended by adding a new section 191-d to read as follows: § 191-D. NON-COMPETE AGREEMENTS. 1. FOR THE PURPOSES OF THIS SECTION, THE TERM: A. "NON-COMPETE AGREEMENT" MEANS AN AGREEMENT, OR CLAUSE CONTAINED IN AN EMPLOYMENT CONTRACT, BETWEEN AN EMPLOYER AND AN EMPLOYEE THAT PROHIB- ITS OR RESTRICTS SUCH EMPLOYEE FROM OBTAINING EMPLOYMENT, AFTER THE CONCLUSION OF EMPLOYMENT WITH THE EMPLOYER INCLUDED AS A PARTY TO THE AGREEMENT: (I) FOR A SPECIFIED PERIOD OF TIME; (II) IN ANY SPECIFIED GEOGRAPHICAL AREA; AND/OR (III) WITH ANY PARTICULAR OTHER EMPLOYER OR IN ANY PARTICULAR INDUS- TRY. B. "UNDUE HARDSHIP" INCLUDES BUT, IS NOT LIMITED TO, SITUATIONS WHERE AN EMPLOYEE LOSES OR LEAVES A JOB DUE TO CIRCUMSTANCES SURROUNDING A DECLARED STATE OF EMERGENCY OR DISASTER EMERGENCY AS DESCRIBED IN SECTION TWENTY-FOUR OR TWENTY-EIGHT OF THE EXECUTIVE LAW. 2. A NON-COMPETE AGREEMENT IS ONLY ENFORCEABLE IF SUCH AGREEMENT: (A) IS NO GREATER THAN REQUIRED FOR THE PROTECTION OF THE LEGITIMATE INTEREST OF THE EMPLOYER; (B) DOES NOT IMPOSE AN UNDUE HARDSHIP ON THE EMPLOYEE; (C) IS NOT INJURIOUS TO THE PUBLIC; AND (D) IS REASONABLE IN TIME PERIOD AND GEOGRAPHIC SCOPE. IF ANY OF THE PROVISIONS OF PARAGRAPH (A), (B), (C) OR (D) OF THIS SUBDIVISION IS VIOLATED, THE NON-COMPETE AGREEMENT IS DEEMED INVALID. § 2. This act shall take effect immediately.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD02974-01-1
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