Introduction

New York’s approach to non-compete enforcement stands at a potential turning point. The state currently applies a flexible common law reasonableness standard, but two pending bills could alter this framework: Senate Bill S4641 would ban most non-competes except for employees earning over USD500,000 annually, and Assembly Bill A1361 would codify existing common law principles and void non-competes when employees are terminated without “good cause”.

Given Governor Kathy Hochul’s December 2023 veto of a broader non-compete ban, S4641’s income-threshold approach appears more likely to gain executive support. The USD500,000 threshold, however, greatly exceeds other states’ income-based restrictions and may face amendment to permit non-competes to cover middle-income workers.

These developments would position New York within an increasingly fragmented national landscape. Four states currently maintain complete bans, nine states impose income-based thresholds and Florida recently enacted pro-business legislation permitting four-year restrictions. States like Massachusetts have adopted hybrid approaches combining reasonableness standards with statutory requirements. Meanwhile, the Federal Trade Commission’s (FTC’s) failed attempt to ban non-competes nationwide, and its pivot to case-by-case enforcement, adds further complexity to an evolving regulatory environment.

This guide provides an overview of current New York law on post-employment non-competes, pending legislative developments, and noteworthy trends across other states and at the federal level.

New York: Current Legal Framework and Potential Changes

Currently, post-employment non-competes are evaluated and enforced by New York courts according to a reasonableness standard developed through decades of case law. Non-competes must be narrowly tailored to protect a legitimate interest of the employer without imposing undue harm on the employee.

What makes a non-compete enforceable in New York?

Under New York law, the enforceability of non-competes is determined by the common law standard outlined in BDO Seidman v Hirshberg, 93 N.Y.2d 382 (1999). In that case, an 18-month non-compete was partially enforced against an accountant to protect the employer’s client relationships. To be deemed reasonable and enforceable, a non-compete covenant must:

• be no greater than required to protect a legitimate interest of the employer;
• not impose undue hardship on the employee, which includes being temporally and geographically reasonable; and
• not be injurious to the public.

Courts have consistently applied this three-part test across all industries for over 25 years. Unlike California (which bans non-competes entirely) or Florida (which permits four-year restrictions), New York takes a middle-ground approach.

What business interests can employers protect?

New York courts have recognised a wide range of protectable employer interests, including:

• preventing an employee’s disclosure of confidential customer information;
• preventing an employee’s solicitation or disclosure of trade secrets (including non-public customer lists and pricing information);
• preventing harm to an employer who is benefitting from an employee’s special or unique services, with such uniqueness stemming from the “special talents” of employees such as musicians, professional athletes or actors;
• protecting the goodwill of an employer’s business created at the employer’s expense; and
• limiting an employee’s competitive use of client relationships developed during the employment relationship.

Protecting employer goodwill and client relationships

New York courts recognise that employers have a protectable interest in client relationships created and maintained using an employer’s resources. Through reasonably tailored non-competes, employers can prevent former employees from competitively exploiting these relationships. In ASAPP, Inc. v Rowbotham, No 650579/2022, 2022 WL 635410 (N.Y. Sup. Ct. Mar. 04, 2022), the court enforced a one-year non-compete against a director of strategic accounts who joined a direct competitor. The court emphasised that the employee had accessed key accounts and used employer resources to develop substantial client relationships. Employers, however, generally cannot use non-competes to protect client relationships that employees developed prior to their employment.

When courts enforce non-competes: key cases

Examples of enforceable non-competes include the following.

• In Attentive Home Care Agency, Inc. v Galinkin, No Index No 505842/2021, 2022 BL 20174 (Sup. Ct. Jan. 13, 2022), the court upheld a one-year restriction preventing a home health aide from serving certain former clients, finding that it protected the employer’s client relationship investments while allowing the employee to work elsewhere in the industry.
• In Cook-Bolden v DG TRC Mgmt. Co., 2019 WL 2119622 (S.D.N.Y. May 13, 2019), the court enforced a two-year, ten-block radius restriction on a dermatologist. The geographic limitation was crucial, preventing an industry-wide prohibition while protecting the employer’s local patient base.
• In Dupuy v Aeis LLC, 81 Misc 3d 1246(A) (N.Y. Sup Ct 2024), a two-year, 100-mile radius non-compete was enforced against a director of business development, since the employee director had significant access to confidential information and could leverage her extensive experience to find work outside the non-compete’s narrow scope.
• In A Plus Med. Care, P.C. v All Seasons Med. Care, P.C., Index No 532557/2023, 2024 BL 492363 (N.Y. Sup. Ct. Apr. 9, 2024), the court enforced a two-year, two-mile radius restriction on a physician, noting the employer invested “substantial time and resources” in training the former employee.

Limited duration and scope can also make non-competes reasonable without geographic restrictions. For example:

• in Alves v Affiliated Home Care of Putnam, Inc., No 16-CV-1593 (KMK), 2017 BL 355007 (S.D.N.Y. Sept. 28, 2017), the court enforced a 90-day non-compete without geographic limits but that only prevented a home healthcare aide from working for clients that the former employee serviced during the employment relationship; and
• in Integra Optics, Inc. v Messina, 52 Misc. 3d 1210(A), 41 N.Y.S.3d 719 (Sup. Ct. 2016), a one-year restriction without geographic limitation was enforced against an account executive, with the court noting the absence of geographic restrictions was reasonable given the narrowly defined market and brief duration.

When courts strike down non-competes: red flags

Courts strike down non-competes exceeding reasonable bounds. For example:

• in Mission Cap. LLC v Javich, No INDEX NO 650576/2022, 2022 BL 157292 (Sup. Ct. Apr. 05, 2022), the court found a one-year non-compete within 1,500 miles of the workplace of a manager of account executives to be unreasonably broad geographically; and
• in Statista Inc. v Gordon, No INDEX NO 655547/2021, 2022 BL 189736 (Sup. Ct. Apr. 12, 2022), an 18-month, 30-mile radius restriction was struck down where the employer failed to justify the restrictions on a sales director who did not have access to confidential information.

Do you need to pay extra for a non-compete?

New York law does not require employers to provide additional consideration beyond the employment relationship itself to enforce a non-compete. A non-compete covenant signed as a pre-condition to employment is enforceable without the employee receiving separate compensation for the restriction. For existing employees, an employer’s promise of continued employment in exchange for signing a non-compete constitutes sufficient consideration, even when the alternative to signing is dismissal from employment. This rule applies to both at-will employees and independent contractors.

This approach distinguishes New York from jurisdictions with more burdensome consideration requirements. For example, Massachusetts requires employers to provide garden leave compensation (at least 50% of the employee’s highest annualised base salary during the restriction period) or other mutually agreed consideration for non-competes to be enforceable.

While consideration may be legally sufficient, the non-compete must still satisfy the three-part reasonableness test outlined above to be enforceable.

Judicial modification (“blue-pencil”) of overbroad restrictions

New York courts may modify (or “blue-pencil”) overbroad non-competes to make them reasonable. Courts, however, refuse modification where employers fail to demonstrate “an absence of overreaching, coercive use of dominant bargaining power, or other anti-competitive misconduct”, as stated in Veramark Techs., Inc. v Bouk, 10 F. Supp. 3d 395, 407 (W.D.N.Y. 2014). The employer must have, in good faith, “sought to protect a legitimate business interest consistent with reasonable standards of fair dealing”, as outlined in Marsh USA, Inc. v Alliant Ins. Servs., Inc., 49 Misc.3d 1210(A) (N.Y. Sup. Ct. 2015).

Termination of the employment relationship

Some New York courts have been skeptical of even partially enforcing non-competes in cases where the former employee was involuntarily terminated, unless the termination was for cause. As stated in Arakelian v Omnicare, Inc., 735 FSupp2d 22, 41 (S.D.N.Y. 2010), the “employer’s continued willingness to employ the party covenanting not to compete” is an essential component of enforceable non-competes that restrain an employee’s mobility. Separately, if the employer breaches a material employment contract term while dismissing an employee (for example, by failing to give contractually required notice of termination or failing to make contractually required payments), the employer generally will not be able to enforce a non-compete.

Forfeiture-for-competition clauses and the employee choice doctrine

Notably, forfeiture-for-competition clauses (which will result in the forfeiture of certain payments or benefits if the employee chooses to compete) are not treated by New York courts as typical post-employment restrictive covenants that must be narrowly tailored to protect an employer’s interest. Instead, as stated in Lucente v Int’l Bus. Machines Corp., 310 F.3d 243, 254 (2d Cir. 2002), courts apply the employee choice doctrine, under which a forfeiture-for-competition clause will be enforced “without regard to its reasonableness if the employee has been afforded the choice between not competing (and thereby preserving his benefits) or competing (and thereby risking forfeiture)”.

What’s coming: two bills that could change everything

New York currently has pending legislative proposals that would alter the state’s approach to non-competes. These new proposals address criticisms related to the broad sweep of the previously proposed anti-non-compete legislation in New York (Senate Bill S3100A), which was vetoed by New York Governor Hochul in December 2023. The vetoed bill would have imposed a California-style outright ban of all non-competes without compensation thresholds. In refusing to sign the bill into law, Governor Hochul stated that her priority was protecting middle-class and low-wage workers while also allowing businesses to retain highly compensated talent through non-competes.

Currently pending Senate Bill S4641

Senate Bill S4641 represents the compromise of protecting worker mobility while providing businesses with more flexibility to impose non-competes on highly compensated employees. The bill states that “no employer shall seek, require, demand or accept a non-compete agreement from any covered individual”, but creates a significant exception for individuals earning at least USD500,000 annually. If approved, S4641 would ban non-competes in New York except for these highly compensated individuals, with annual adjustments beginning in 2027 based on the Consumer Price Index. The bill is currently pending in the Assembly Labor Committee, with potential passage expected in the 2026 legislative session. Exceptions would apply for business sale covenants, non-disclosure agreements and non-solicitation provisions.

Currently pending Assembly Bill A1361

Assembly Bill A1361, introduced on 8 January 2025 and currently pending in the Assembly Labor Committee, would codify current common law principles as outlined in BDO Seidman v Hirshberg and also add specific protections for employees dismissed without “good cause”. The bill defines “good cause” as the “failure to satisfactorily perform job duties, violation of employment policies, or other misconduct”, and renders any non-compete signed by an employee dismissed without cause as void. This approach attempts to prevent employers from “manufacturing termination grounds to trigger non-compete restrictions”. Bill A1361 would also grant the NY Department of Labor authority to investigate violations and impose civil penalties of up to USD10,000. This bill has broader legislative support than S4641 and could potentially pass in the current legislative session, though it faces opposition from business groups who argue that it creates uncertainty in employment relationships.

Comparing Bill S4641 and Bill A1361

The two pending bills represent different approaches. Senate Bill S4641 bans most non-competes while creating a carve-out for highly compensated employees. Assembly Bill A1361 maintains the current common law framework while adding protection for employees dismissed without good cause.

Governor Hochul’s position remains pivotal. Her December 2023 veto demonstrates her preference for balanced reform protecting middle-class and lower-wage workers from non-compete restrictions, while preserving business flexibility for highly compensated employees. This suggests greater likelihood of support for S4641’s threshold-based approach over A1361’s maintenance of the status quo, though the Governor has not explicitly endorsed either proposal.

Non-Competes in Other States: The Current US Landscape

Other states have already implemented diverse approaches ranging from complete prohibitions to pro-business legislation.

States prohibiting non-competes

Four states ban non-competes: California, Minnesota, Oklahoma and North Dakota. This number could soon increase to eight, as Michigan, Ohio, Tennessee and Washington all have pending legislation as of October 2025 that, if passed, will impose a similar ban. California pioneered these non-compete bans, with a key feature being the absence of exceptions, including any exceptions based on employee income thresholds. Non-competes in these states are generally unenforceable except under extremely narrow circumstances that rarely apply to everyday employees.

In California, exceptions include the sale of the goodwill of a business or an ownership interest therein and the dissolution of a partnership or limited liability company. These exceptions are strictly construed and typically do not apply to ordinary employment relationships. Simply including a non-compete provision in an employment agreement can be a civil violation under California law.

Out-of-state businesses may face difficulties when attempting to apply non-compete agreements to employees who relocate to or work from states prohibiting non-competes, resulting in complex jurisdictional and choice-of-law issues that can render otherwise valid restrictive covenants unenforceable, even when the agreement contains a choice-of-law provision selecting a more permissive jurisdiction.

States following common law reasonableness standards

Most states continue to follow common law reasonableness approaches to non-compete enforcement, like New York’s current framework outlined above. These jurisdictions evaluate non-competes on a case-by-case basis, applying multi-factor tests that balance employer interests in protecting legitimate business concerns against employee mobility and public interests in competition. Courts typically examine whether the restriction:

• protects a legitimate employer interest (such as trade secrets or customer relationships);
• is reasonable in temporal and geographic scope; and
• is not unduly burdensome to the employee or harmful to the public.

States such as Texas, Georgia and Pennsylvania adopt this approach. This framework can offer flexibility to adapt to industry-specific circumstances, but creates uncertainty regarding enforceability, prompting some states to adopt more definitive legislative frameworks.

States with reasonableness standards and additional requirements

Several states pair common law reasonableness tests with specific statutory rules. For example, in Massachusetts, enforceability analysis goes beyond reasonableness and also requires the following statutory requirements in connection with non-competes:

• fair and reasonable consideration independent of continued employment;
• scope no broader than necessary to protect an employer’s legitimate business interests;
• garden leave compensation (at least 50% of the employee’s highest annualised base salary) or other mutually agreed consideration;
• duration not exceeding 12 months (or 24 months for breach of fiduciary duty or trade secret misappropriation);
• non-competes must be provided before a formal offer or at least ten business days before employment commences; and
• non-competes cannot apply to non-exempt employees, students in internships, employees aged 18 or younger and employees terminated without cause.

Louisiana similarly requires non-competes to be in writing and limits their duration to two years, while Nevada mandates specific disclosure requirements and imposes heightened scrutiny in certain industries. These hybrid frameworks give courts flexibility within clear statutory limits, offering a middle ground that may inform New York’s legislative considerations.

States with income-based thresholds for non-competes

Nine states (Colorado, Illinois, Maine, Maryland, New Hampshire, Oregon, Rhode Island, Virginia and Washington) apply non-competes only on employees whose earnings exceed a minimum threshold. As of October 2025, these thresholds range from USD30,160 in New Hampshire to USD127,091 in Colorado and are typically adjusted annually based on inflation indices.

Assuming the applicable income threshold is met, some of these states will then also consider other factors like duration, legitimate interests of employers and adequate consideration to determine enforceability. This income-based threshold approach represents a middle-ground protecting lower-wage workers from restrictive non-competes while preserving businesses’ ability to protect legitimate interests through agreements with highly compensated employees, who typically have greater access to sensitive information and client relationships. If the pending Senate Bill S4641 described above is approved, New York would exclude the largest group of workers from the application of non-competes due to its proposed income threshold of USD500,000.

States that are pro-non-compete regulation: the case of Florida

While states are increasingly restricting the use of non-competes, Florida’s CHOICE Act (effective 1 July 2025) went in the opposite direction. The CHOICE Act allows for the enforcement of non-competes with a post-employment duration of up to four years on employees earning more than twice the annual mean wage in the county where the employee is primarily employed. The CHOICE Act explicitly states that non-competes do not violate the state’s public policy and allows courts to enter preliminary injunctions against employees in cases of alleged breach, with streamlined procedures that lower the evidentiary burden on employers seeking immediate relief and effectively create a presumption of enforceability.

Florida’s CHOICE Act represents one of the most business-friendly approaches in the United States. This approach stands in stark contrast to restrictive trends in states like California and Minnesota and may attract businesses in industries where employee mobility poses significant risks to proprietary information and client relationships.

Federal Developments: The FTC’s Proposed Ban of Non-Competes

The FTC issued a Non-Compete Clause Rule on 23 April 2024 that categorised non-competes as an “unfair method of competition”, with the aim of prohibiting their enforcement nationwide. However, recent judicial developments and changes within the FTC itself have prevented implementation of this comprehensive reform.

The FTC’s failed nationwide ban

The Biden era’s FTC’s non-compete ban faltered when a Texas district court set aside the rule on 20 August 2024, ruling that the FTC exceeded its statutory authority and that its ban was arbitrary and capricious, preventing the rule from taking effect before its designated effective date of 4 September 2024. The court’s decision in Ryan, LLC v Federal Trade Comm’n, 746 F. Supp. 3d (N.D. Tex, 2024) questioned whether the FTC had the authority to issue such a broad rule. Subsequently, the FTC, under the Trump administration, withdrew its appeals of both the Texas ruling and a similar Florida district court order.

The FTC’s case-by-case enforcement approach

More recently, the FTC, under the Trump administration, has signalled a strategy of targeted enforcement, with FTC Chairman Andrew Ferguson emphasising that non-competes are often abused and can “severely inhibit workers’ ability to make a living”. The agency’s revised approach focuses on “aggressive” enforcement of antitrust laws against specific non-compete agreements on a case-by-case basis, leaving broader legislative action to Congress and state governments.

Following this approach, the FTC issued an administrative complaint against Gateway, a large pet cremation company. Gateway’s non-competes prohibited employees from working in the pet cremation industry anywhere in the country for one year post-termination. The FTC alleged these restrictions constituted “unfair methods of competition” in violation of Section 5 of the FTC Act. A proposed consent order followed, directing Gateway to cease entering into or enforcing its non-competes and to notify employees accordingly.

The FTC also issued a request for information (RFI) on 4 September 2025 that gives the public 60 days to submit information on non-competes in their industry, with the FTC seeking to increase its understanding of abusive practices by employers. The FTC’s case-by-case approach could influence how courts and state legislatures evaluate the reasonableness of non-competes.

Key Takeaways

New York’s legislative crossroads

New York’s non-compete landscape may undergo significant transformation in 2026, with two competing bills offering divergent approaches. S4641’s income threshold model aligns with a growing national trend but sets a high USD500,000 compensation threshold in order to enforce a non-compete that may prove politically untenable. A1361’s codification approach offers more continuity with current common law approaches but may face the same resistance that doomed the 2023 ban.

A fragmented national landscape

The United States lacks consensus on non-compete regulation. Complete bans (California, Minnesota, North Dakota, Oklahoma) coexist with income-based thresholds (nine states), pro-enforcement frameworks (Florida) and hybrid statutory/common law approaches (Massachusetts). This fragmentation creates significant compliance challenges for multi-state employers and raises choice-of-law questions for mobile workforces.

The FTC’s evolving role

While the FTC’s nationwide ban failed in federal court, the agency’s pivot to case-by-case enforcement signals continued federal scrutiny of non-competes, particularly those affecting lower-wage workers or imposing industry-wide restrictions. This enforcement approach may influence state legislative debates and judicial interpretation of reasonableness standards.

Implications for practice

Regardless of New York’s legislative outcome, the trend towards greater restriction of non-competes appears likely to continue, with particular focus on protecting lower-wage and middle-income workers. Employers should anticipate increased scrutiny of non-compete provisions and consider whether alternative protection, such as non-solicitation agreements, confidentiality provisions and trade secret protection, can provide an additional or alternative avenue for protecting legitimate business interests in an evolving regulatory environment.