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In 2023, the State of New York’s legislature passed a law to ban all non-compete agreements. If the governor had signed the law, New York would have been the fifth state in the country to ban non-compete clauses. Instead, New York Governor Kathy Hochul vetoed the legislation, preferring to see a version that would have allowed non-compete agreements for individuals making above a certain amount of money (around $250,000).
Now, in 2026, it is likely another non-compete bill will pass through New York’s legislature. This version of the law is not a complete ban on non-compete clauses but contains significant limitations that would make it harder for employers to enforce them. If signed into law, New York would ban the agreements for individuals making less than $500,000 per year and for certain “health related professionals.”
Current Status
The New York Senate has already passed the non-compete bill, 2025-S4641A. It is currently waiting to be passed in the Assembly (the lower chamber). Because the unified New York Legislature passed a broader non-compete law in 2023, it is likely that the state Assembly will pass this version too.
What still remains uncertain is whether Governor Hochul will sign the legislation or, once again, veto the bill.
A New Salary Threshold & Timeline for Non-Competes
The revised law would allow non-competes in the context of the sale of a business and also for highly compensated individuals, namely those that receive at least $500,000 in compensation. “Compensation” would include base salary, bonuses, and certain other forms of remuneration. For the purposes of the law, “compensation” is determined by reviewing an applicable three-year average of W-2 statements for wages and K-1 statements for other income.
Put another way, the revised law bans non-compete agreements for employees making less than $500,000. That threshold is also tied to the Consumer Price Index. If signed into law, this cut-off would be higher than those in other jurisdictions that have passed similar laws (such as Illinois, Colorado, and Washington, D.C.).
Moreover, under the proposed new statute, the length of the non-compete cannot exceed one year, and the employer must pay the employee’s salary during that one-year period. (This payment scheme is a version of a garden leave provision, as we previously explained when discussing the new Florida non-compete law.) But “salary” is not the same as “compensation”: only one's base salary must be paid out, which might be significantly less than one’s previous total compensation prior to the garden leave period, as it may have included bonuses or deferred compensation.
A Non-Compete Ban for Many Medical Professionals
One unique aspect of the revised law is that it bans non-competes for certain medical professionals, regardless of their annual income. The proposal includes a lengthy definition of several types of medical professionals licensed under New York’s Education Law, including physicians, chiropractors, dentists, perfusionists, veterinarians, physical therapists, pharmacists, nurses, podiatrists, optometrists, psychologists, occupational therapists, speech pathologists, and mental health practitioners. Additionally, the new law is not retroactive; it would only apply to agreements signed after the law became effective.
Additional Considerations
Even in situations in which a non-compete is not automatically banned, there are other restrictions that make it difficult for employers to enforce these agreements. New York common law, for example, imposes certain limitations and would continue to apply to the enforceability of non-competes even if this bill became law.
Further, the proposed law contains additional provisions that affect how non-competes are litigated, including the following:
- It would allow employees to file a lawsuit to void an applicable non-compete, to recover liquidated damages up to $10,000, to recover attorneys’ fees and costs, and to recover lost compensation or compensatory damages.
- It would require employers to post a notice regarding employees’ rights under the new law.
- It would mandate that the law apply to any employee who “lives or works in New York State, including remote workers reporting to a New York-based worksite or supervisor.”
New York’s large number of workers and concentration of capital often positions the state to be uniquely impactful, and the passage of this law would likely reverberate across the U.S. Further, organizations operating in multiple states will have to navigate how they handle yet another non-compete regulation that may intersect with other non-compete developments, such as Florida’s non-compete law.
This area of law is constantly developing and requires keeping a watchful eye on how legislatures are responding to both business needs and worker mobility.