Major Changes on the Horizon for New York’s Laws on Non-Competition Agreements

Non-compete agreements in New York are changing fast

If you’ve ever started a new job and been handed a stack of paperwork that includes a non-compete agreement — also called a non-competition agreement — you’re not alone. These clauses are common across industries, and they can have a real impact on your ability to move jobs, grow your career, or even earn a living. New York has been working hard to change the rules around them, and the landscape has shifted significantly since 2023. Here’s where things stand and what it means for you.

What is a non-compete agreement?

A non-compete agreement is a contract (or sometimes a clause buried inside a broader employment contract) that restricts where you can work after you leave a job. Typically, these agreements prohibit you from working for a competitor, starting a competing business, or working in a particular industry for a set period of time and within a certain geographic area after your employment ends.

Employers argue these agreements protect legitimate business interests, like trade secrets and long-standing client relationships. But critics, and a growing number of lawmakers, argue that they are too often used as a tool to keep workers stuck, prevent them from seeking better opportunities, or pressure them into staying in jobs they’d otherwise leave.

The 2023 ban: What happened

In June 2023, the New York State Legislature passed a sweeping bill that would have banned virtually all non-compete agreements in the state. The bill was ambitious: it covered employees, independent contractors, and anyone economically dependent on an employer, and it would have voided any non-compete signed or modified after the law’s effective date.

Governor Kathy Hochul vetoed the bill on December 22, 2023. Her concern was not with banning non-competes for everyday workers — she supported that idea — but with the bill’s lack of a salary threshold. She wanted protections for middle-class and lower-wage workers while preserving some ability for businesses to use non-competes with highly compensated executives. The two sides were close but could not agree on the specifics before the deadline.

The 2025 bill: A revised effort

Lawmakers went back to work, and in February 2025, State Senator Sean Ryan — who also sponsored the 2023 bill — introduced a revised version, Senate Bill S4641A. This updated bill passed the New York State Senate in June 2025 and is now awaiting action in the Assembly. Key updates in the new bill include:

• A salary threshold exemption: Workers earning an average of $500,000 or more over the prior three years (“highly compensated individuals”) can still be subject to a non-compete, but only for a maximum of one year, and only if the employer continues paying them during that period
• A business sale carve-out: Non-competes tied to the sale of a business are still permitted, addressing a gap in the 2023 bill
• Healthcare worker protections: All healthcare workers, regardless of income, would be protected from non-competes — recognizing the broader public interest in continuity of patient care
• A private right of action: Employees would be able to sue employers who violate the law and could recover lost compensation, other damages, and attorneys’ fees

If this bill passes and is signed into law, it would take effect 30 days later and would apply to non-competes signed or modified after that date — not retroactively.

What the law says right now

Until a new law passes, non-compete agreements in New York are still governed by a “reasonableness” standard. That means courts will not automatically enforce a non-compete just because you signed it. To be enforceable, a non-compete must:

• Protect a legitimate business interest (like genuine trade secrets or specialized client relationships)
• Not impose an undue hardship on the employee
• Not harm the general public
• Be reasonable in both geographic scope and duration

The famous Jimmy John’s case is a good example of what “unreasonable” looks like in practice. That sandwich chain asked delivery drivers and cashiers to sign non-competes prohibiting them from working for any employer that made more than 10% of its revenue from sandwiches, within two miles of any Jimmy John’s location, for two years. The New York Attorney General successfully challenged those agreements, and the company agreed to stop using them with New York employees. That’s a clear-cut case — but many non-competes that are technically unenforceable never get challenged simply because workers don’t know they have options.

What stays permitted even under the new bill

It’s important to understand that not all restrictive covenants are the same. Even if New York’s new non-compete ban becomes law, the following types of agreements would still be permitted:

• Non-disclosure agreements (NDAs): Agreements that prevent you from sharing an employer’s trade secrets or confidential client information
• Client non-solicitation agreements: Agreements that prevent you from actively recruiting clients you met through your employer
• Garden leave agreements: Arrangements where you are paid your full salary during a notice or transition period in exchange for not starting a new role right away

These are distinct from a true non-compete, which restricts your ability to work in your field entirely. Knowing the difference matters, especially when you’re reviewing a contract or considering your options after leaving a job.

A national trend toward worker freedom

New York is part of a broader national movement. California, North Dakota, Oklahoma, and Minnesota have already banned non-compete agreements outright. The Federal Trade Commission (FTC) under the Biden administration also proposed a nationwide ban in 2024, though that rule has faced legal challenges and is currently under review by federal courts. More than ten other states, including Colorado, Illinois, and Maine, have passed significant restrictions on non-competes even if they haven’t banned them entirely.

The message across the country is consistent: non-compete agreements that trap workers, limit their earning potential, and serve no real business purpose are increasingly seen as unfair and unenforceable.

Not sure if your non-compete is enforceable?

Non-compete law in New York is genuinely complex, and it’s evolving. Whether you’re being asked to sign one, feel like one is holding you back from a new opportunity, or are facing pressure from a former employer, it’s worth getting informed. If you’ve signed a non-competition agreement and aren’t sure what it means for a situation you’re currently facing, reach out to our team at VKV. We’ll help you understand what’s actually enforceable and what your rights are.