Employment Non-Competes in New York: What Employers and Employees Need to Know

Non-compete agreements—contracts that restrict an employee from working for a competitor or starting a competing business after leaving their job—have long been a staple of employment law. For decades, employers used them to protect trade secrets, customer relationships, and investments in employee training.

But in New York, and across the country, the legal landscape around employment non-competes is changing fast. Courts have always viewed them with skepticism, and now lawmakers are poised to restrict them even further. Here’s what you need to know if you operate in the Empire State.

1. The Traditional Standard: Reasonableness

New York courts have never banned employment non-competes outright, but they scrutinize them under a strict reasonableness test. A non-compete is enforceable only if it:

• Protects the employer’s legitimate business interest (like trade secrets, confidential information, or unique client relationships);

• Does not impose an undue hardship on the employee;

• Is reasonable in duration and geography; and

• Is not injurious to the public.

For example, a one-year non-compete preventing a high-level executive from joining a direct competitor in the same city may pass muster. But a five-year ban preventing a mid-level employee from working anywhere in the industry across the U.S. is almost certainly unenforceable.

2. Increasing Judicial Skepticism

Even before recent legislative activity, courts were already narrowing the scope of employment non-competes. Judges often refused to enforce provisions that seemed more about punishing employees than protecting legitimate business interests.

Courts will also “blue-pencil” (narrow) overly broad non-competes—but only if the employer can show it acted in good faith when drafting them. If a court believes the employer was overreaching, the entire clause may be struck down.

3. Legislative Developments

In 2023, New York lawmakers passed a bill that would have banned employment non-competes statewide, with narrow exceptions. Governor Hochul vetoed the bill, signaling she favored a version that still allowed non-competes for high-wage earners or in very limited circumstances.

While no statewide ban is currently in effect, the political momentum is clear: New York is moving toward tighter restrictions on employment non-competes. Employers should expect renewed legislative efforts in the coming years, especially in light of federal action (the Federal Trade Commission has also proposed rules banning most non-competes nationwide).

4. Alternatives for Employers

Given this climate, New York employers should consider alternatives that are more enforceable and less risky than non-competes:

• Non-solicitation agreements: Restrict employees from poaching clients or coworkers.

• Confidentiality agreements: Protect trade secrets and sensitive business information.

• Garden leave clauses: Pay employees during the restricted period, reducing hardship and making restrictions more palatable.

These alternatives focus on protecting business interests without broadly limiting an employee’s ability to work.

5. What Employees Should Know

Employees asked to sign non-competes in New York should:

• Read carefully: Understand how long the restriction lasts, what geographic areas it covers, and what industries it applies to.

• Negotiate: Employers may be willing to narrow the scope or provide compensation in exchange for signing.

• Know your rights: Overly broad agreements may be unenforceable, but challenging one can still require legal action.

Final Thought

Employment non-competes in New York are hanging in the balance. While they are technically still enforceable under the reasonableness test, courts disfavor them, and lawmakers may soon outlaw them altogether.

For employers, the safest path forward is to use non-solicitation and confidentiality clauses rather than broad non-competes. For employees, the key is to know your rights before signing and to push back against restrictions that could unfairly limit your career.

This blog is for informational purposes only and does not constitute legal advice. If you’re an employer drafting restrictive covenants or an employee facing enforcement of a non-compete, consult with experienced employment counsel.