ALBANY, N.Y. (WTEN) — Experts say about one in five Americans in the workforce are bound by a non-compete agreement. Many of those workers earning less than $40,000 per year. But a new bill that awaits the Governor’s signature could remove all non-compete agreements (also known as restrictive agreements) across the state.
When the agreements were first created, they were used mostly in the private equity and finance area, but now it’s common across many fields, according to Employment and Labor Attorney, Helen Rella. “What we typically see in restrictive covenant, non-compete agreements are conditions that say ‘after you leave the employment of the employer, that you will not work, either in the same field, or in the same area for certain period of time subsequent to the employment,'” she said.
She said California has had non-compete prohibition for years and it’s not surprising New York is following suit, “New York has enacted many pieces of legislation, rules and regulations that are protective of employees in the workplace, so from an employment law perspective it was just a matter of time.” Rella said when non-competes are challenged in court, judges tend to find them to be unreasonable. If signed by the governor, the bill would not impact existing contracts, only those moving forward. “So the notion behind the prohibition is that people should be free to go out and earn a living and that they shouldn’t be prohibited from doing so because they’re bound by these types of documents,” she said.
What if a former employee attempts to pursue clientele at their previous job? Would the new law allow for that? Rella says, that’s still to be determined, “How this plays out once it’s signed remains to be seen because there are specific nuances in the restrictive covenant area that haven’t been addressed.” If signed by the Governor, employers will have thirty days to make necessary changes to their contracts.