The New York State Senate has successfully passed a bill that aims to prohibit the use of non-compete agreements within the state to safeguard every employee’s future employment opportunities.
The bill, S.3100A, if signed into law, will effectively curb employers from imposing restrictions that hinder their employees’ mobility, without unduly impeding businesses from protecting proprietary information through alternative means such as confidentiality agreements and non-solicitation agreements.
According to State Senator Sean Ryan, who has championed the bill, non-compete agreements, as presently practiced, exert a negative influence on New York State’s labor market and economy. These agreements restrict workers from exploring employment opportunities that may be better suited to their skills and aspirations. When employees are burdened with non-competes, the pool of qualified job applicants becomes limited, making it increasingly challenging for businesses to attract talented individuals, even when offering competitive wages and benefits.
In specific industries, non-compete agreements have a particularly adverse impact on consumers as they disrupt the continuity of care, which is especially prevalent in the medical field.
According to a comprehensive survey conducted in 2019 by the Economic Policy Institute and Cornell University, non-competes affect between 27.8% and 46.5% of private-sector workers in the United States, with 18.1% of all workers being covered by such agreements.
Within New York, nearly 45% of workplaces subject their employees to non-compete agreements. In response to these statistics, the federal government has expressed interest in implementing a nationwide ban on these agreements through a Federal Trade Commission (FTC) regulation. However, the passing of S.3100A would establish a state law banning non-compete agreements.
The bill must now pass the New York State General Assembly before the governor’s signature to make it state law.
Federal and state rules are leading to numerous changes to the enforceability of existing and new non-compete agreements. Potomac Legal Group is following the changes. Our employment attorneys are available to provide guidance to employees who have non-compete agreements or provisions in employment contracts and severance agreements.
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