Introduction

New York’s approach to post-employment non-compete enforcement stands at a potential turning point. The state applies a flexible common law reasonableness standard, but four pending bills could significantly alter this framework. Senate Bill S4641 and the newer Senate Bill S9759 and Assembly Bill A10023 would ban most non-competes except for employees earning over USD500,000 annually and impose additional enforcement conditions on highly compensated employees (HCEs), while Assembly Bill A1361 would codify existing common law principles and void non-competes when employees are terminated without “good cause”.

New York is positioned within an increasingly fragmented national landscape. Five states now maintain complete or near-complete bans on post-employment non-competes. Ten states impose income-based thresholds. Others have adopted hybrid statutory/common law approaches or newly enacted comprehensive frameworks, while Florida maintains pro-business legislation permitting four-year restrictions. Meanwhile, the US Federal Trade Commission (FTC) abandoned its attempt to ban non-competes nationwide and pivoted to case-by-case enforcement.

This article surveys 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

Post-employment non-competes are governed by 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 for over 25 years.

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 benefiting from an employee’s special or unique services (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 employer 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, emphasising 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 developed by employees prior to their employment.

When courts enforce non-competes: key cases

Courts have enforced non-competes with geographic limitations in a range of cases, including the following.

• In Attentive Home Care Agency, Inc. v Galinkin, 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 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, finding the geographic limitation protected the employer’s local patient base without an industry-wide prohibition.
• 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 who had significant access to confidential information and could leverage her experience to find work outside the non-compete’s 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’s substantial investment in training the former employee.

Limited duration and scope can also make non-competes reasonable without geographic limitations. 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 that 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

Courts strike down non-competes where they determine such restrictions are unreasonable. For example:

• in Mission Cap. LLC v Javich, 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; and
• in Statista Inc. v Gordon, 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 an employee an additional amount 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 signed as a pre-condition to employment is enforceable without separate compensation. For existing employees, an employer’s promise of continued employment in exchange for signing a non-compete constitutes sufficient consideration, even when the alternative is dismissal.

While consideration may be legally sufficient, the non-compete must still satisfy the three-part reasonableness test 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 sceptical 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 F. Supp. 2d 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 (eg, failing to give contractually required notice or make required payments), the employer generally will not be able to enforce a non-compete.

Forfeiture-for-competition clauses and the employee choice doctrine

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. 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)”.

NY potential legislative changes: four pending bills

New York has pending legislative proposals that would alter the state’s approach to non-competes, addressing criticisms of Senate Bill S3100A, which was vetoed by Governor Hochul in December 2023 and would have imposed a California-style outright ban without compensation thresholds.

Currently pending Senate Bill S4641

Senate Bill S4641 represents a compromise between protecting worker mobility and preserving business flexibility to impose non-competes on HCEs. The bill prohibits employers from seeking or requiring a non-compete from any “covered individual” but creates a significant exception for individuals earning at least USD500,000 annually. If approved, S4641 (i) would ban non-competes in New York except for these HCEs, with annual CPI adjustments beginning in 2027, and (ii) would add an unconditional ban for all licensed healthcare professionals.

Currently pending Assembly Bill A1361

Assembly Bill A1361, introduced on 8 January 2025, remains pending in the Assembly Labor Committee (re-referred on 7 January 2026). The bill would codify current common law principles as outlined in BDO Seidman v Hirshberg and add specific protections for employees dismissed without “good cause”, defined as “failure to satisfactorily perform job duties, violation of employment policies, or other misconduct”. Any non-compete signed by an employee dismissed without cause would be void. The bill would also grant the NY Department of Labor authority to investigate violations and impose civil penalties of up to USD10,000.

Newly introduced Senate Bill S9759 and Assembly Bill A10023

Senate Bill S9759, introduced by Senator Gianaris on 6 April 2026, and Assembly Bill A10023, introduced on 28 January 2026, are the most comprehensive proposals to date.

Together, these bills would effectively prohibit non-compete agreements for all workers other than individuals with an annual compensation of at least USD500,000, determined by the income reported on the three most recent Forms W-2 or Schedules K-1. In a departure from existing law (and the S4641 framework), non-compete agreements with such highly compensated individuals would only be enforceable under the bills if they:

• satisfy New York common law enforceability standards;
• are limited to one year in duration; and
• require the employer to pay the employee’s full salary throughout the entire enforcement period.

Non-competes entered into in connection with the sale of a business would also remain permissible, subject to these same conditions. These requirements go further than S4641 in regulating the terms on which non-competes may be enforced by introducing a paid garden leave-style obligation. If enacted, S9759/A10023 would significantly increase both the cost and practical complexity of enforcing non-competes.

Non-Competes in Other States: The Current US Landscape

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

States prohibiting non-competes

Four states currently maintain outright bans on non-competes: California, Minnesota, Oklahoma and North Dakota. Non-competes are generally unenforceable in these states except under extremely narrow circumstances. In California, limited exceptions exist for the sale of the goodwill of a business and the dissolution of a partnership or limited liability company. These exceptions are strictly construed and typically do not apply to ordinary employment relationships. Washington has enacted a near-total ban, effective 30 June 2027 and retroactive in its application. Rhode Island has advanced a near-complete ban through its Senate, and several other states continue to have pending legislation as of May 2026.

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. In these jurisdictions, 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. While flexible, this framework creates enforcement uncertainty, which has prompted some states to adopt more definitive legislative frameworks.

Delaware: recent judicial developments

Delaware applies a common law reasonableness standard to non-competes. A series of recent decisions has clarified both the consideration required to support non-competes and the level of scrutiny applied to their scope.

• In North American Fire Ultimate Holdings LP v Doorly, No 142, 2025, 2026 WL 274647 (Del. Feb. 3, 2026), the Delaware Supreme Court held that equity awards constitute adequate consideration for restrictive covenants, even when subsequently forfeited, and that consideration is assessed at contract formation, not enforcement. It also confirmed that equity incentives subject to vesting or performance conditions are not illusory so long as they confer a genuine, even if “somewhat contingent”, opportunity to receive a benefit at formation.
• In Payscale Inc. v Norman, No 297, 2025, 2026 WL 774876 (Del. Mar. 19, 2026), the Delaware Supreme Court held that contingent equity awards, including profits interest units with no immediate cash value at grant, can constitute sufficient consideration, and that an 18-month nationwide non-compete was not facially unenforceable where the employer pleaded sufficient facts connecting the restriction’s scope to its legitimate interests.
• In HKA Glob., LLC v Beirise, 2025 WL 3639811 (Del. Ch. Dec. 16, 2025), the Delaware Court of Chancery declined to enforce a 12-month nationwide non-compete because it extended to the employer’s entire corporate group, including parent and subsidiary entities for which the employee had never worked, and was not reasonably tailored to the work the employee actually performed.
• In Fortiline, Inc. v McCall, No 300, 2025, 2026 WL 369934 (Del. Feb. 10, 2026), the Delaware Supreme Court confirmed that restrictive covenants are subject to reasonableness review whether injunctive relief or damages are sought, and held that a one-year nationwide non-compete extending to competition with any entity in the employer’s corporate group was unenforceable as overbroad.

States with reasonableness standards and additional requirements

Several states pair common law reasonableness tests with specific statutory rules. For example, under Massachusetts statute, enforceability requires the following:

• 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 or employees terminated without cause.

Louisiana limits duration to two years, while Nevada mandates specific disclosure requirements and imposes heightened scrutiny in certain industries. Tennessee has enacted a comprehensive statutory framework that similarly codifies enforceability conditions. These hybrid frameworks give courts flexibility within clear statutory limits.

States with income-based thresholds for non-competes

Ten states (Colorado, Illinois, Maine, Maryland, New Hampshire, Oregon, Rhode Island, Virginia, Washington and Tennessee) apply non-competes only to employees whose earnings exceed a minimum threshold. As of May 2026, these thresholds range from USD30,160 in New Hampshire to USD130,014 in Colorado and are typically adjusted annually based on inflation indices. The District of Columbia also imposes an income-based threshold of USD162,164. Where the applicable threshold is met, these states may also consider duration, legitimate employer interests and adequate consideration to determine enforceability.

Florida: pro-non-compete enforcement

While states are increasingly restricting the use of non-competes, Florida’s CHOICE Act (effective 1 July 2025) has gone 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.

New Emerging Trends

Healthcare professionals: a growing carve-out

A notable emerging trend across multiple states is the targeted restriction or prohibition of non-compete agreements for licensed healthcare practitioners, regardless of income levels or the state’s general non-compete framework. States such as New Hampshire, Virginia, Missouri, Utah, Maine and Vermont have either enacted or proposed legislation prohibiting non-compete agreements for healthcare professionals. New York’s pending S4641 bill similarly includes an unconditional ban for all licensed healthcare professionals.

Federal Developments: The FTC

FTC abandons nationwide ban

In August 2024, a Texas district court set aside the Biden-era FTC non-compete ban, ruling that it was arbitrary and capricious (Ryan, LLC v Federal Trade Comm’n, 746 F. Supp. 3d (N.D. Tex, 2024)). Subsequently, the FTC, under the Trump administration, withdrew its appeals of both the Texas ruling and a similar Florida district court order. The FTC has since formally removed its non-compete ban from the Code of Federal Regulations, and, as of 12 February 2026, the rule was officially withdrawn.

FTC’s case-by-case enforcement approach

The FTC, under the Trump administration, has deployed a strategy of targeted enforcement. At a workshop on 27 January 2026, Chairman Andrew Ferguson confirmed that the FTC would continue to pursue a case-by-case enforcement approach, emphasising that non-competes are often abused and can “severely inhibit workers’ ability to make a living”.

Following this approach, the FTC issued administrative complaints against Gateway, a pet cremation company whose non-competes prohibited employees from working in the pet cremation industry nationwide for one year post-termination, and Rollins, a pest control company whose non-competes imposed a two-year, 75-mile radius restriction on more than 18,000 employees, alleging that these restrictions constituted “unfair methods of competition” in violation of Section 5 of the FTC Act.

The FTC has also used its monitoring authority for targeted oversight. On 8 May 2026, it issued a warning letter to Mortgage Connect LP after reviewing court filings seeking enforcement of a non-compete against a former employee. The FTC noted that Mortgage Connect required all employees to sign non-competes without individualised role-based consideration, and encouraged the company to review its employment contracts and adopt less restrictive protections, such as non-solicitation and confidentiality agreements.

In its 2026–2030 strategic plan, the FTC identified non-compete agreements as a continuing enforcement priority.

Key Takeaways

New York’s non-compete landscape may undergo significant transformation, with four pending bills offering a range of approaches. S4641 and the newer S9759/A10023 share an income-threshold structure consistent with a growing national trend, though S9759/A10023 go further by imposing a full-salary continuation obligation during enforcement and a one-year duration limit. A1361’s codification approach offers the most continuity with existing common law, but may face the same resistance as the failed 2023 ban. With S4641 stalled in committee since June 2025 and A1361 re-referred in January 2026, S9759 and A10023 likely represent the legislature’s most current thinking on the path forward.

The United States lacks consensus on non-compete regulation. Complete bans or near-complete bans now cover five jurisdictions and coexist with income-based thresholds, pro-enforcement frameworks and hybrid statutory/common law approaches. This fragmentation creates significant compliance challenges for multi-state employers and raises choice-of-law questions for mobile workforces. The FTC’s pivot to case-by-case enforcement signals continued federal scrutiny, particularly for non-competes affecting lower-wage workers or imposing industry-wide restrictions.

Regardless of New York’s legislative outcome, the trend towards greater restriction of non-competes appears likely to continue. Employers should anticipate increased scrutiny of non-compete provisions and consider whether alternative protections, such as non-solicitation agreements, confidentiality provisions and trade secret protections, can adequately protect legitimate business interests in an evolving regulatory environment.