New York

New York Poised to Enact Broad Ban on Non-Compete Agreements

LPLeave a comment

Author Becky Canary-King

On June 20, 2023, the New York State Assembly approved legislation banning non-competes for employees and independent contracts, regardless of wage or salary. The New York Senate had approved the bill on June 7, 2023, and it is now awaiting the governor’s signature. If Governor Kathy Hochul signs the law, it would go into effect 30 days after it’s signed.

The proposed ban would prohibit non-competes for all New York employees and independent contractors, regardless of their salary or wage. The law has limited exceptions, which include:

  • Agreements for a fixed term of service, which likely would permit “garden leave” agreements.
  • Non-disclosure agreements for trade secrets or confidential and proprietary client information.
  • Non-solicitation agreements covering clients of the employer that the covered individual learned about during employment.

Notably, unlike other states that have banned non-competes, New York’s proposed law does not include an express carve-out for non-compete agreements related to the sale of a business.

The proposed law authorizes individuals to sue companies that violate the law. There is a two-year statute of limitations on legal action, with the clock starting to run at the later of the following: (i) when the prohibited non-compete was signed, (ii) when the individual learns of the prohibited non-compete, (iii) when the employment or contractual relationship is terminated, or (iv) when the employer takes steps to enforce the prohibited non-compete agreement. Employers that violate the law may be liable for liquidated damages, lost compensation, and attorneys’ fees.

The law would go into effect 30 days after it’s signed and would not apply retroactively. Accordingly, employers should prepare to take immediate action to revise template restrictive covenant agreements upon signing, but do not need to revisit existing agreements.

If signed, New York would join a growing number of states that have banned or restricted the use of non-compete agreements, including Minnesota, California, North Dakota, and Oklahoma. On the federal level, the Federal Trade Commission (FTC) proposed a new rule earlier this year restricting the use of non-compete agreements as an “unfair method of competition” in violation of Section 5 of the FTC Act. The proposed rule would (i) ban employers from entering into non-compete agreements with workers and (ii) require employers to rescind existing non-competes.

We will continue to monitor legal developments regarding non-competes. If you have questions about non-competes or other employment matter, do not hesitate to reach out to LP’s Employment & Executive Compensation Group. 

NYC’s Latest Expansion of its Vaccine Mandate – What You Need to Know

LPLeave a comment

Author: Laura Friedel

On December 6, 2021, NYC mayor Bill DeBlasio announced that all private-sector workers in the city will be subject to the vaccine mandate, effective December 27. The following day, however, Judge Frank P. Nervo in the Supreme Court of New York suspended the mandate pending a hearing scheduled for December 14, 2021. If upheld, the mandate requires two vaccine doses, unless a person received Johnson & Johnson’s single-dose vaccine, and will impact 184,000 businesses.

Mayor DeBlasio’s action closely followed action in Florida where a new standard technically permits vaccine mandates, but only if employees are permitted to opt out by submitting an exemption statement on one of five grounds (medical, religious, COVID-19 immunity, compliance with regular testing at the employer’s cost, of agreement to comply with reasonable PPE requirements). The new NYC and Florida requirements are just the latest in a string of state and local regulations around vaccine mandates (some requiring, some prohibiting, and some finding a place in the middle).

Earlier this year, an OSHA Emergency Temporary Standard (ETS) was issued. The ETS would require vaccination or weekly testing for employees of employers with 100 or more employees, but this requirement is in flux while courts hash out arguments regarding its enforceability. On November 12, 2021, the U.S. Court of Appeals for the Fifth Circuit granted a motion to stay the ETS, and the U.S. Court of Appeals for the Sixth Circuit now has jurisdiction over the ETS legal challenges. The Department of Labor has filed a motion to lift the stay entered by the Fifth Circuit, but in the meantime, OSHA has suspended implementation and enforcement of the ETS.

With the ETS in limbo and local jurisdictions implementing their own vaccine mandate requirements, businesses around the country are wondering what this means for them. The following are three recommendations to keep in mind:

  1. Consider local rules and regulations regarding vaccine mandates. In large part, your obligations will depend on where your employees are located and whether you are a government contractor or in the health care industry. If the ETS becomes effective, it will preempt state and local requirements that don’t go as far to require vaccines (such as in Florida), but until then, state and local requirements limiting employers’ right to require vaccines will prevail.
  2. Make a decision internally as to whether, if the ETS becomes effective, you will offer testing as an option for all or only for those who can’t get vaccinated for medical, religious, or similar reasons. Also, think about how you plan to conduct testing (such as requiring employees to get tested on own and turn in proof or testing employees on-site).
  3. Remind employees that management is following the situation and urge employees to get vaccinated now. Businesses can send a letter to their employees letting them know that the company is monitoring the new rules, including state and local requirements and the OSHA ETS, and that you will be following any rules that are enacted in your jurisdiction. As such, employees are strongly encouraged to get vaccinated now so that they are in compliance if/when it becomes effective. Additionally, if testing only will be offered to those employees with a bona fide need for an exception, you should let them know that they need to request an accommodation by a specific date so that the company has enough time to review the requests.

If you have any other questions regarding COVID-related mandates or other COVID-related issues, a member of our Labor & Employment Group would be happy to speak with you.

Illinois Bars Non-Competes For Low-Wage Employees; New York Similarly Critical

LPLeave a comment

signing-contractUnder the new Illinois Freedom to Work Act, Illinois employers cannot impose non-compete agreements on “low wage employees.”  The Act comes in response to growing concerns and lawsuits over non-compete agreements imposed on employees by certain fast-food companies. Effective January 1, 2017, the Act defines a “low wage employee” as any employee who earns the greater of (1) the hourly minimum wage under federal (currently $7.25 per hour), state (currently $8.25 per hour) or local law (currently $10.50 per hour in Chicago) or (2) $13.00 per hour. The Act defines a non-compete agreement as an agreement between an employer and a “low-wage employee” that restricts such low-wage employee from performing:

  • any work for another employer for a specific period of time;
  • any work in a specified geographical area; or
  • work for another employer that is similar to such low-wage employee’s work for the employer included as a party to the agreement. 

The Act does not specifically ban non-solicitation agreements with low-wage employees, in which the employee promises not to solicit employer customers or employees. This will likely be answered in future litigation … stay tuned.

Similarly, the New York Attorney General has been extremely critical of non-competes for low-wage employees, and has publicly announced various monetary settlements with employers who required low-level employees to sign non-competes as a condition of employment. Employers with New York operations should be very wary of requiring low-wage workers to sign such agreements, and are encouraged to consult counsel before doing so.