Prohibits non-compete agreements and certain restrictive covenants which unreasonably and unfairly bar or inhibit post-employment competition and protects certain workers from inappropriate and unnecessary restrictions on future employment.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7193
SPONSOR: Dinowitz TITLE OF BILL: An act to amend the labor law, in relation to prohib-
iting non-compete agreements and certain restrictive covenants
PURPOSE OR GENERAL IDEA OF BILL:
The bill would clarify and update New York labor law regarding the
permissible use of non-compete agreements in employment contracts.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1, which adds a new section 191-d to the labor law, is divided
as follows:
Subsection 1: Defines "non-compete agreement" and "covered-employee."
Subsection 2: Provides that no employer or its agent, or the officer or
agent of any corporation, partnership, or limited liability company,
shall seek, require, demand or accept a non-compete agreement from a
covered employee.
Subsection 3: Outlines standards and requirements for non-compete agree-
ments with regard to employees or potential employees who are subject to
such agreements.
Subsection 4: Provides that an employee, including a covered employee,
may bring a civil action in a court of competent jurisdiction against
any employer or persons alleged to have violated this section.
The employee shall bring such action within two years of the later of:
(i) when the prohibited non-compete agreement was signed; (ii) when the
employee learns of the prohibited non-compete agreement; (iii) when the
employment relationship is terminated; or (iv) when the employer takes
any steps to enforce the non-compete agreement.
The court shall have jurisdiction to void a non-compete agreement and to
order all appropriate relief.
Liquidated damages shall be calculated as an amount not more than ten
thousand dollars. The court shall award liquidated damages to every
affected employee in addition to other permitted remedies.
The court shall also award the consideration payment required under this
section if the employer did not provide such payment when due.
Section 2 contains a severability clause.
Section 3 sets the effective date (180 days after it shall have become a
law).
JUSTIFICATION:
The purpose of this bill is to promote economic growth by prohibiting
non-compete agreements and restrictive covenants that unreasonably and
unfairly bar or inhibit post-employment competition, and to protect
workers from inappropriate and unnecessary restrictions on future
employment. The bill will also help to ensure that businesses can hire
the best worker for the job.
Non-compete agreements present particular challenges for low-wage and
rank-and-file workers, who are increasingly subject to these
restrictions. Such workers, and/or their potential employers, may be
deterred by non-compete agreements from seeking new employment, but may
never have the opportunity to meaningfully negotiate such agreements and
may lack the means to challenge a non-compete agreement in court.
A March 2016 report published by the U.S. Treasury Department found that
non-compete agreements cause various harms to "worker welfare, job
mobility, business dynamics, and economic growth more generally." A May
2016 report published by the Obama White House concluded that non-com-
pete agreements also depress wages and inhibit innovation.
PRIOR LEGISLATIVE HISTORY:
None.
FISCAL IMPLICATIONS:
None to the State.
EFFECTIVE DATE:
180 days after it shall have become law.
STATE OF NEW YORK
________________________________________________________________________
7193
2019-2020 Regular Sessions
IN ASSEMBLY
April 11, 2019
___________
Introduced by M. of A. DINOWITZ, CRESPO, TITUS, STECK -- (at request of
the Department of Law) -- read once and referred to the Committee on
Labor
AN ACT to amend the labor law, in relation to prohibiting non-compete
agreements and certain restrictive covenants
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The labor law is amended by adding a new section 191-d to
2 read as follows:
3 § 191-d. Non-compete agreements. 1. For the purposes of this section,
4 the term:
5 a. "Non-compete agreement" means an agreement, or clause contained in
6 an employment contract, between an employer and an employee that prohib-
7 its or restricts such employee from obtaining employment, after the
8 conclusion of employment with the employer included as a party to the
9 agreement:
10 (i) for a specified period of time;
11 (ii) in any specified geographical area; and/or
12 (iii) with any particular other employer or in any particular indus-
13 try.
14 b. "Covered employee" means any employee whose earnings are less than
15 seventy-five thousand dollars annually. This threshold shall be annually
16 increased, where warranted by application of the below-described formu-
17 la, pursuant to a percentage to be determined by reference to the
18 consumer price index, published by the United States Bureau of Labor
19 Statistics, for the applicable calendar year. Said percentage shall
20 equal fifty percent of the annual inflation, as determined from the
21 increase in the consumer price index in the one-year period ending on
22 March thirty-first prior to the cost-of-living adjustment effective on
23 the ensuing September first. Said percentage shall then be rounded up to
24 the next higher one-tenth of one percent and shall not exceed three
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD07440-01-9
A. 7193 2
1 percent. If the percentage increase would be less than one percent, the
2 threshold shall not increase.
3 2. No employer or its agent, or the officer or agent of any corpo-
4 ration, partnership, or limited liability company, shall seek, require,
5 demand or accept a non-compete agreement from a covered employee.
6 3. For all employees other than covered employees, no employer or his
7 or her agent, or the officer or agent of any corporation, partnership,
8 or limited liability company, shall seek, require, demand or accept a
9 non-compete agreement from any employee unless the non-compete agreement
10 meets the following requirements:
11 a. It shall be in writing and signed by the employer and employee.
12 b. It shall be provided to a prospective employee by the earlier of a
13 formal offer of employment or thirty days before the non-compete agree-
14 ment goes into effect.
15 c. If a current employee is not subject to a non-compete agreement,
16 any new non-compete agreement must be provided at least thirty days
17 before the agreement becomes effective.
18 4. If an employee subject to a non-compete agreement is discharged
19 without cause, the non-compete agreement is no longer enforceable as to
20 that employee.
21 5. a. An employee, including a covered employee, may bring a civil
22 action in a court of competent jurisdiction against any employer or
23 persons alleged to have violated this section. An employee shall bring
24 such action within two years of the later of: (i) when the prohibited
25 non-compete agreement was signed; (ii) when the employee learns of the
26 prohibited non-compete agreement; (iii) when the employment relationship
27 is terminated; or (iv) when the employer takes any step to enforce the
28 non-compete agreement. The court shall have jurisdiction to void any
29 such non-compete agreement and to order all appropriate relief, includ-
30 ing enjoining the conduct of any person or employer; ordering payment of
31 liquidated damages; and awarding lost compensation, damages, reasonable
32 attorneys' fees and costs.
33 b. For the purposes of this subdivision, liquidated damages shall be
34 calculated as an amount not more than ten thousand dollars. The court
35 shall award liquidated damages to every employee affected under this
36 section, in addition to any other remedies permitted by this section.
37 c. The court shall also award a consideration payment if the employer
38 did not provide such payment when due.
39 6. The provisions of this section shall not apply to employees
40 covered under section two hundred two-k of this chapter.
41 § 2. Severability clause. If any clause, sentence, paragraph, subdivi-
42 sion, section or part of this act shall be adjudged by any court of
43 competent jurisdiction to be invalid, such judgment shall not affect,
44 impair, or invalidate the remainder thereof, but shall be confined in
45 its operation to the clause, sentence, paragraph, subdivision, section
46 or part thereof directly involved in the controversy in which such judg-
47 ment shall have been rendered. It is hereby declared to be the intent of
48 the legislature that this act would have been enacted even if such
49 invalid provisions had not been included herein.
50 § 3. This act shall take effect on the one hundred eightieth day after
51 it shall have become a law.
