Are employee non-compete agreements enforceable in New York?
New York generally decides the enforceability of an employee non-compete under a common-law reasonableness standard and enforces it only to the extent it is reasonable, except that Labor Law § 202-k bars a broadcasting industry employer from requiring a broadcast employee to accept a post-employment non-compete as a condition of employment. On a touch screen, a tap shows all 3 sources in this group.
The controlling standard comes from the Court of Appeals decision in BDO Seidman v. Hirshberg. A restraint is reasonable only if it: (1) is no greater than required to protect the employer's legitimate interest, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public . A violation of any prong invalidates the covenant, so a New York non-compete is enforceable only if it satisfies all three .
The New York Attorney General's public guidance describes the same framework, adding that a covenant must also be reasonable in time period and geographic scope . Trial courts apply the test to non-competes and to closely related restraints such as customer and employee non-solicitation clauses .
A non-compete that binds an employed physician is measured under the common-law reasonableness standard BDO Seidman describes for employee agreements not to compete . Under that test, a restraint is reasonable only if, among other things, it is not injurious to the public . A physician covenant whose radius or term would cut patients off from their physician invites the argument that it fails that public-injury prong, which the test treats as a separate ground for holding the restraint unreasonable .
Sources for this answer
Labor Law § 202-k prohibits a broadcasting industry employer from requiring, as a condition of employment, that a broadcast employee or prospective broadcast employee refrain from obtaining employment in a specified area, for a specific period, or with a particular employer or industry after the employment ends.
A broadcasting industry employer shall not require as a condition of employment, whether in an employment contract or otherwise, that a broadcast employee or prospective broadcast employee refrain from obtaining employment: (a) in any specified geographic area; (b) for a specific period of time; or (c) with any particular employer or in any particular industry; after the conclusion of employment with such broadcasting industry employer.
See N.Y. Lab. Law § 202-k(2).
BDO Seidman describes the modern, prevailing common-law standard of reasonableness for employee agreements not to compete as a three-pronged test.
The modern, prevailing common-law standard of reasonableness for employee agreements not to compete applies a three-pronged test.
See BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 388 (1999).
BDO Seidman holds that a violation of any prong of the three-pronged reasonableness test renders an employee non-compete invalid.
A violation of any prong renders the covenant invalid.
See BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 389 (1999).
Natural Organics restates the BDO three-prong reasonableness test as applied by New York's intermediate appellate courts.
"A restraint is reasonable only if it: (1) is no greater than is required for the protection of the legitimate interest of the employer, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public"
See Natural Organics, Inc. v. Kirkendall, 52 A.D.3d 488 (2d Dep't 2008).
The New York Attorney General's guidance summarizes the four-factor enforceability framework for employees.
A non-compete is only allowed and enforceable to the extent it (1) is necessary to protect the employer’s legitimate interests, (2) does not impose an undue hardship on the employee, (3) does not harm the public, and (4) is reasonable in time period and geographic scope.
See N.Y. Att'y Gen., Non-Compete Agreements in New York State: Frequently Asked Questions (2022).
OTG Management states the reasonableness standard New York courts apply to covenants ancillary to employment.
In order to be enforceable, an anticompetitive covenant ancillary to an employment agreement must be reasonable in time and area, necessary to protect the employer’s legitimate interests, not harmful to the public, and not unreasonably burdensome to the employee.
See OTG Mgt., LLC v. Konstantinidis, 40 Misc. 3d 617 (Sup. Ct. N.Y. County 2013).
What legitimate business interests can support a New York non-compete?
A New York covenant must guard against misappropriation of trade secrets or confidential customer lists, or against competition by a former employee whose services were unique or extraordinary, or against a former employee's exploitation of client goodwill created and maintained at the employer's expense. On a touch screen, a tap shows all 2 sources in this group.
These limits trace to Reed, Roberts Associates v. Strauman, which declined to restrain an employee's use of his knowledge of the intricacies of the employer's business operation where that knowledge was not a trade secret and there was no conspiracy or breach of trust resulting in commercial piracy. On a touch screen, a tap shows all 2 sources in this group. A covenant aimed only at ordinary competition fails, because there is no protectable interest behind it .
Each covenant in the agreement needs a recognized interest behind it. New York recognizes a short list — trade secrets or confidential customer information, unique or extraordinary services, and client goodwill created and maintained at the employer's expense — and nothing else . In Reed, Roberts, where the knowledge was not a trade secret and there was no conspiracy or breach of trust resulting in commercial piracy, the Court of Appeals saw no reason to restrain the former employee's use of his knowledge of the intricacies of the employer's business operation; a broad confidentiality definition that sweeps them in, without an express exclusion, reaches beyond what the law protects. On a touch screen, a tap shows all 2 sources in this group. The non-investment covenant is the exposed one — hardship with no protectable interest behind it is how covenants fail, and a covenant protecting no legitimate interest is unenforceable outright . Two consequences travel with this: a contemporaneous return, deletion, and certification record is the evidence that real trade secrets and confidential customer information were at stake, and an assignee inherits a covenant only as far as the original interest genuinely travels with the deal — an assignment moves the covenant but cannot mint a new interest to support it.
The unique or extraordinary services category is demanding. It is not enough that the employee excels or is valuable; the services must be special enough that the employee's loss would cause irreparable injury or be effectively irreplaceable. On a touch screen, a tap shows all 2 sources in this group. Whether an employee's services are unique, special, or extraordinary turns on the employee's particular relationship to the business and is decided case by case .
The remedies clause's irreparable-harm recital does not itself secure an injunction. Absent trade secrets or confidential customer lists, injunctive enforcement of a New York restraint can rest on the employee's services being genuinely special, unique, or extraordinary — a case-by-case inquiry focused on the employee's relationship to the employer's business. On a touch screen, a tap shows all 3 sources in this group. The recital does no harm, but it cannot stand in for a covenant actually anchored to a trade secret or to services demonstrably unique.
Sources for this answer
Gallagher quotes BDO's statement that an employer's protectable interests are limited to trade secrets, confidential customer lists, and unique or extraordinary services, and adds BDO's recognition of client goodwill created and maintained at the employer's expense.
An employer’s interests justifying a restrictive covenant are limited “to the protection against misappropriation of the employer’s trade secrets or of confidential customer lists, or protection from competition by a former employee whose services are unique or extraordinary” (BDO Seidman v Hirshberg, 93 NY2d at 389 ; see Reed, Roberts Assoc. v Strauman, 40 NY2d at 308 ). In addition, “[t]he employer has a legitimate interest in preventing former employees from exploiting or appropriating the goodwill of a client or customer, which had been created and maintained at the employer’s expense, to the employer’s competitive detriment”
See Arthur J. Gallagher & Co. v. Marchese, 96 A.D.3d 791 (2d Dep't 2012).
BDO Seidman recognizes an employer's legitimate interest in preventing former employees from exploiting client goodwill created and maintained at the employer's expense, to the employer's competitive detriment.
The employer has a legitimate interest in preventing former employees from exploiting or appropriating the goodwill of a client or customer, which had been created and maintained at the employer’s expense, to the employer’s competitive detriment
See BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 392 (1999).
In Reed, Roberts, the Court of Appeals refused, absent wrongdoing, to bar a former employee from using his knowledge of the intricacies of the employer's business operation.
Apparently, the employer is more concerned about Strauman’s knowledge of the intricacies of their business operation. However, absent any wrongdoing, we cannot agree that Strauman should be prohibited from utilizing his knowledge and talents in this área (see Restatement, Agency 2d, § 396, Comment b).
See Reed, Roberts Assocs. v. Strauman, 40 N.Y.2d 303, 309 (1976).
Reed, Roberts declines to restrain a former employee's use of knowledge that does not qualify as a trade secret, absent a conspiracy or breach of trust resulting in commercial piracy.
Where the knowledge does not qualify for protection as a trade secret and there has been no conspiracy or breach of trust resulting in commercial piracy we see no reason to inhibit the employee’s ability to realize his potential both professionally and financially by availing himself of opportunity.
See Reed, Roberts Assocs., Inc. v. Strauman, 40 N.Y.2d 303 (1976).
Natural Organics holds that without a legitimate employer interest, a non-compete is unenforceable and partial enforcement does not arise.
Since there is no legitimate employer interest to protect, the noncompete agreement is unenforceable and the issue of partial enforcement does not arise
See Natural Organics, Inc. v. Kirkendall, 52 A.D.3d 488 (2d Dep't 2008).
Weitz defines the demanding 'unique or extraordinary' threshold for enforcing a covenant absent trade secrets.
More must, of course, be shown to establish such a quality than that the employee excels at his work or that his performance is of high value to his employer.
See Purchasing Assocs., Inc. v. Weitz, 13 N.Y.2d 267 (1963).
Ticor (applying New York law) confirms that special, unique, or extraordinary services may entitle an employer to injunctive relief.
Services that are not simply of value to the employer, but that may also truly be said to be special, unique or extraordinary may entitle an employer to injunctive relief.
See Ticor Title Ins. Co. v. Cohen, 173 F.3d 63 (2d Cir. 1999).
Ticor explains that whether services are unique is a fact-specific, case-by-case inquiry into the employee's relationship to the business.
Instead, now the inquiry is more focused on the employee’s relationship to the employer’s business to ascertain whether his or her services and value to that operation may be said to be unique, special or extraordinary; that inquiry, because individual circumstances differ so widely, must of necessity be on a case-by-case basis.
See Ticor Title Ins. Co. v. Cohen, 173 F.3d 63 (2d Cir. 1999).
Will a New York court narrow (blue-pencil) an overbroad non-compete?
New York rejects a per se rule voiding every overbroad covenant; where the overbroad part is not essential to the bargain, a court may partially enforce the covenant after a case-specific look at whether the employer acted in good faith and without overreaching or coercion. On a touch screen, a tap shows all 2 sources in this group.
The decisive factor is the employer's conduct. Where the unenforceable portion is not an essential part of the agreed exchange and the employer shows an absence of overreaching, coercive use of bargaining power, or other anti-competitive misconduct, and sought in good faith to protect a legitimate business interest, consistent with reasonable standards of fair dealing, partial enforcement may be justified . The Attorney General's guidance describes the same possibility — a court may enforce some parts of a covenant for a shorter time or smaller area while disregarding unreasonable portions . For a clause-by-clause pass over a specific agreement under these drafting constraints, the New York non-compete reviewer checklist walks the full covenant suite item by item with each requirement's force level.
But there is no severance to perform when the covenant protects no legitimate interest at all; in that case the agreement is simply unenforceable .
Two enforcement-posture choices can forfeit the good-faith record on which partial enforcement depends . A third-party notice conditioned on a reasonable belief that the employee may actually breach stays within that record; warning a new employer off a worker on the strength of an overbroad covenant is the kind of aggressive enforcement conduct that undercuts it and can invite a tortious-interference claim. Fee-shifting that is mutual and prevailing-party based reads the same way; a one-way employer fee clause layered onto an aggressive covenant reads as the coercive posture that costs an employer the partial-enforcement safety valve .
Sources for this answer
BDO Seidman rejects a per se rule that would void any overbroad employee non-compete in its entirety.
The prevailing, modern view rejects a per se rule that invalidates entirely any overbroad employee agreement not to compete.
See BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 394 (1999).
BDO Seidman holds that where the unenforceable portion is not an essential part of the agreed exchange, a court conducts a case-specific analysis of the employer's conduct, and partial enforcement may be justified if the employer acted in good faith without overreaching, coercion, or other anti-competitive misconduct.
Instead, when, as here, the unenforceable portion is not an essential part of the agreed exchange, a court should conduct a case specific analysis, focusing on the conduct of the employer in imposing the terms of the agreement (see, Restatement [Second] of Contracts § 184). Under this approach, if the employer demonstrates an absence of overreaching, coercive use of dominant bargaining power, or other anti-competitive misconduct, but has in good faith sought to protect a legitimate business interest, consistent with reasonable standards of fair dealing, partial enforcement may be justified
See BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 394 (1999).
The Attorney General's guidance explains that courts may enforce only the reasonable portions of a non-compete.
A court may require an employee to comply with some parts of a non-compete agreement, even if other portions of the agreement are unreasonable, such as length of time or geographic scope.
See N.Y. Att'y Gen., Non-Compete Agreements in New York State: Frequently Asked Questions (2022).
Natural Organics holds that when no legitimate interest exists, the covenant is unenforceable and partial enforcement does not arise.
Since there is no legitimate employer interest to protect, the noncompete agreement is unenforceable and the issue of partial enforcement does not arise
See Natural Organics, Inc. v. Kirkendall, 52 A.D.3d 488 (2d Dep't 2008).
Is continued employment enough consideration for a New York non-compete signed after hire?
Continued at-will employment can supply the consideration for a New York non-compete signed after hire where the relationship then continues for a substantial period after the covenant is given. On a touch screen, a tap shows all 3 sources in this group.
New York treats at-will employment as a relationship that will support a restrictive covenant . Like any contract term, a promise not to compete must be supported by adequate consideration . In the at-will setting, the employer's right to discharge without cause means that forbearing to exercise that right is a legal detriment that can stand as consideration . The catch is duration: if the worker is fired shortly after signing, the forbearance is illusory and the consideration fails, whereas a relationship that continues for a substantial period after the covenant is given validates the consideration .
A post-hire covenant holds only on real consideration, recorded in the consideration recital. A promise not to compete must be supported by adequate consideration like any other contract term , and forbearance from discharging an at-will worker is a legal detriment that can supply it — but that forbearance is real rather than illusory only where employment in fact continues for a substantial period after the covenant is given . Continued employment alone is the weaker basis; fresh, identifiable consideration such as a raise, promotion, or bonus is safer because it does not depend on after-the-fact tenure. And an amendment that adds or expands a covenant mid-employment re-opens the same question, so a routine refresh can quietly create a covenant with no consideration behind it.
Sources for this answer
Zellner holds that at-will employment is a relationship capable of supporting a restrictive covenant.
We believe, however, that at-will employment qualifies as a relationship which will support a restrictive covenant.
See Zellner v. Stephen D. Conrad, M.D., P.C., 183 A.D.2d 250 (2d Dep't 1992).
Zellner holds that continued employment for a substantial period validates the consideration for an after-hire covenant.
However, where, as here, a relationship continues for a substantial period after the covenant is given, the forbearance is real, not illusory, and the consideration given for the promise is validated.
See Zellner v. Stephen D. Conrad, M.D., P.C., 183 A.D.2d 250 (2d Dep't 1992).
Zellner restates that a non-compete promise must be supported by adequate consideration.
As with any contract, the promise not to compete must be supported by adequate consideration on the part of the promisee.
See Zellner v. Stephen D. Conrad, M.D., P.C., 183 A.D.2d 250 (2d Dep't 1992).
Zellner holds that an employer's forbearance from discharging an at-will worker is a legal detriment that can serve as consideration.
Because in at-will employment the employer has the right to discharge the employee (or, as here, an independent contractor providing services under a similar arrangement), without cause, and without being subject to inquiry as to his or her motives (Sabetay v Sterling Drug, supra), forbearance of that right is a legal detriment which can stand as consideration for a restrictive covenant.
See Zellner v. Stephen D. Conrad, M.D., P.C., 183 A.D.2d 250 (2d Dep't 1992).
How does New York treat customer and employee non-solicitation covenants?
In OTG Management, a New York trial court treated employee non-recruitment clauses as less restrictive than a full non-compete while still subjecting them to reasonableness scrutiny; in Brown & Brown, the Court of Appeals held a customer restraint overbroad under New York law to the extent it barred the employee from working with customers she had never met, did not know about, and had done no work for. On a touch screen, a tap shows all 2 sources in this group.
In OTG Management v. Konstantinidis, the court denied a non-compete injunction but enforced a non-recruitment clause, finding it reasonable in scope and not a meaningful burden on the worker . OTG, a New York trial court following lower-court and federal authority, treated no-recruit clauses as inherently more reasonable than non-competes because they restrict less .
An employee non-solicit sized to Covered Employees rather than drawn at large fits the reasonableness test it still must clear. The OTG Management court treated employee non-recruitment clauses as inherently more reasonable and less restrictive than non-competes, while still subjecting them to reasonableness scrutiny . The OTG court enforced the non-recruitment clause because it was reasonable in scope and imposed no meaningful burden on the employee .
Customer non-solicitation fares differently when it sweeps too broadly. In Brown & Brown v. Johnson, applying New York law, the Court of Appeals found the former employee's customer non-solicitation provision overbroad to the extent it prohibited her from working with any of the employer's New York customers, even those she had never met, did not know about, and had done no work for. Applying New York law, the Court found factual issues that kept it from deciding whether partial enforcement was appropriate, and remitted for further proceedings. On a touch screen, a tap shows all 2 sources in this group.
A customer non-solicit that reaches customers the employee never met, did not know about, and did no work for is overbroad. A restraint tied to customer relationships the employee actually developed or serviced through work for the employer avoids the overbreadth Brown & Brown found, and a preserved request for partial enforcement under BDO Seidman leaves a fallback if it is trimmed. On a touch screen, a tap shows all 2 sources in this group.
Sources for this answer
OTG Management treats employee non-recruitment clauses as inherently more reasonable and less restrictive than non-competes.
While both Renaissance Nutrition and Lazer recognized that non-recruitment clauses are subject to reasonableness scrutiny because they are anti-competitive in nature, non-recruitment clauses are “inherently more reasonable and less restrictive” than noncompete clauses.
See OTG Mgt., LLC v. Konstantinidis, 40 Misc. 3d 617 (Sup. Ct. N.Y. County 2013).
OTG Management held a non-recruitment clause enforceable because it was reasonable in scope and imposed no meaningful burden on the employee.
Here, the court finds that the non-recruitment clause is enforceable because it is reasonable in scope and imposes no meaningful burden on Konstantinidis.
See OTG Mgt., LLC v. Konstantinidis, 40 Misc. 3d 617 (Sup. Ct. N.Y. County 2013).
Applying New York law, Brown & Brown found factual issues that prevented it from determining whether partial enforcement of the non-solicitation provision was appropriate, and remitted for further proceedings.
Applying New York law, we also conclude that factual issues exist which prevent us from determining whether partial enforcement of the agreement's non-solicitation provision is appropriate. Hence, we remit for further proceedings.
See Brown & Brown, Inc. v. Johnson, 25 N.Y.3d 364 (2015).
Addressing the agreement's non-solicitation provision, Brown & Brown holds the restrictive covenant overbroad under New York law to the extent it prohibited the employee from working with any of the employer's New York customers, even those she had never met, did not know about, and had done no work for.
We turn next to the question of whether the non- solicitation provision should be partially enforced. Under New York law, the restrictive covenant was overbroad to the extent that it prohibited Johnson from working with any of plaintiffs' - 7 - - 8 - No. 92 New York customers, even those Johnson had never met, did not know about and for whom she had done no work (see BDO Seidman, 93 NY2d at 392-393; Vital Crane Servs., Inc. v Micucci, 118 AD3d 1404, 1405 [4th Dept 2014]; Weiser LLP v Coopersmith, 74 AD3d 465, 467-468 [1st Dept 2010]; Scott, Stackrow & Co., C.P.A.'s, P.C. v Skavina, 9 AD3d 805, 806-807 [3rd Dept 2004], lv denied 3 NY3d 612 [2004]).
See Brown & Brown, Inc. v. Johnson, 25 N.Y.3d 364 (2015).
BDO Seidman allows case-specific partial enforcement of an overbroad covenant whose unenforceable portion is not essential to the agreed exchange, where the employer acted in good faith without overreaching, coercion, or other anti-competitive misconduct.
Instead, when, as here, the unenforceable portion is not an essential part of the agreed exchange, a court should conduct a case specific analysis, focusing on the conduct of the employer in imposing the terms of the agreement (see, Restatement [Second] of Contracts § 184). Under this approach, if the employer demonstrates an absence of overreaching, coercive use of dominant bargaining power, or other anti-competitive misconduct, but has in good faith sought to protect a legitimate business interest, consistent with reasonable standards of fair dealing, partial enforcement may be justified
See BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 394 (1999).
How are sale-of-business and goodwill non-competes treated in New York?
New York enforces an express non-compete given on the sale of a business if it is reasonable in time, scope and extent, and when someone sells a business and its goodwill, New York also implies a covenant barring the seller from improperly soliciting the former customers — a duty the Court of Appeals describes as permanent and narrower than an express non-compete. On a touch screen, a tap shows all 4 sources in this group.
In Bessemer Trust v. Branin, the Court of Appeals confirmed that the implied covenant bars a seller of goodwill from improperly soliciting former clients . The seller may still accept business that comes without active solicitation, but remains under a permanent duty not to solicit . That implied duty is narrower than an express covenant because it restricts solicitation rather than competition generally .
The optional no-business-with-covered-customers covenant rests on a strong, documented goodwill interest, and stands on weak ground without one. It bars accepting even unprompted patronage — more than New York's goodwill doctrine asks even of a seller of a business, who may accept customers who choose to leave without prompting while remaining barred from active solicitation. On a touch screen, a tap shows all 2 sources in this group. Because it demands more from a mere employee than the implied covenant demands of a seller of goodwill, it presses hardest on the undue-hardship prong of the reasonableness test; a version sized to Covered Customers the employee had material contact with is the defensible one, and its inclusion is a deliberate risk decision rather than a default.
S4641A is a pending bill, not current law. If enacted, it would not prohibit non-competes in the sale of the goodwill of a business or the sale or disposition of a majority of an ownership interest in a business by a partner, a limited liability company member, or an entity, for a partner or member owning at least a 15% interest or a person or entity owning 15% or more; any non-compete the bill permits would still have to meet New York's common-law enforceability requirements, run no longer than one year, and provide for payment of salary during the period of enforcement .
The sale-of-business clause holds on the line New York's implied goodwill covenant draws. A seller of a business and its goodwill is barred from improperly soliciting the former customers , yet remains free to accept the patronage of customers who leave without prompting — and that implied duty, though permanent, is narrower than an express covenant. On a touch screen, a tap shows all 2 sources in this group. A clause that bars a seller from accepting unsolicited business under the banner of goodwill protection reaches past that line; the doctrine restricts solicitation, not acceptance. Sale-of-business and goodwill covenants get more favorable treatment than employee covenants, and while the pending S4641A bill would expressly preserve the category for qualifying owners even under a statutory ban, that is pending only, not law .
Sources for this answer
Reed, Roberts states that where a business is sold, anticompetition covenants are enforceable if reasonable in time, scope and extent, as one context in which the formulation of reasonableness varies.
Yet the formulation of reasonableness may vary with the context and type of restriction imposed. For example, where a business is sold, anticompetition covenants will be enforceable, if reasonable in time, scope and extent.
See Reed, Roberts Assocs. v. Strauman, 40 N.Y.2d 303, 307 (1976).
Bessemer Trust holds that on a sale of goodwill, the implied covenant bars the seller from improperly soliciting former clients.
In answering the certified question, we continue to apply our precedents in Von Bremen and Mohawk and hold that the “implied covenant” bars a seller of “good will” from improperly soliciting his former clients.
See Bessemer Trust Co., N.A. v. Branin, 16 N.Y.3d 549 (2011).
Mohawk Maintenance holds that the seller may accept unsolicited patronage but remains under a permanent duty not to solicit former customers after a sale of goodwill.
Although defendants may accept the patronage of those customers who were actively dealing with Mohawk on the date of the sale if such customers choose to leave Mohawk without prompting from defendants, the defendants remain under a positive and permanent duty to refrain from interfering with the rights acquired by plaintiff as a result of its acquisition of Mohawk’s “good will”.
See Mohawk Maintenance Co. v. Kessler, 52 N.Y.2d 276 (1981).
Mohawk Maintenance explains the implied covenant imposes a narrower duty than an express non-compete.
As such, the “implied covenant” imposes a much narrower duty than do express covenants purporting to restrict the seller’s right to compete in a particular geographical area or field of endeavor.
See Mohawk Maintenance Co. v. Kessler, 52 N.Y.2d 276 (1981).
S4641A, a pending bill, would not prohibit non-competes in the sale of a business's goodwill or of a majority ownership interest for a partner or LLC member owning at least fifteen percent of the partnership or LLC, or a person or entity owning fifteen percent or more of the business, but any non-compete permissible under the bill would still have to meet New York's common-law enforceability requirements, contain a term of restriction of no more than one year, and provide for salary during the period of enforcement.
NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION TO THE CONTRARY, NOTHING IN THIS SECTION SHALL PROHIBIT THE INCLUSION AND ENFORCEMENT OF NON-COMPETE AGREEMENTS OR OTHER SIMILAR COVENANTS IN THE SALE OF THE GOODWILL OF A BUSINESS OR THE SALE OR DISPOSITION OF A MAJORITY OF AN OWNERSHIP INTEREST IN A BUSINESS BY A PARTNER OF A PARTNERSHIP, A MEMBER OF A LIMITED LIABILITY COMPANY, OR AN ENTITY FOR: (A) ANY SUCH PARTNER OF A PARTNERSHIP OR MEMBER OF A LIMITED LIABILITY COMPANY OWNING AT LEAST A FIFTEEN PERCENT INTEREST IN SUCH PARTNERSHIP OR LIMITED LIABILITY COMPANY; OR (B) ANY SUCH PERSON OR ENTITY OWNING FIFTEEN PERCENT OR MORE OWNERSHIP INTEREST IN A BUSINESS. 7. ANY NON-COMPETE AGREEMENT THAT IS PERMISSIBLE OR ENFORCEABLE UNDER THIS SECTION SHALL: (A) MEET ALL REQUIREMENTS FOR DETERMINING ENFORCEABILITY UNDER THE COMMON LAW OF NEW YORK, INCLUDING BUT NOT LIMITED TO: (I) IT IS REASONABLE IN TIME, GEOGRAPHY, AND SCOPE; (II) IT DOES NOT IMPOSE AN UNDUE HARDSHIP ON THE EMPLOYEE; (III) IT DOES NOT HARM THE PUBLIC; (IV) IT IS NECESSARY TO PROTECT THE EMPLOYER'S LEGITIMATE BUSINESS INTERESTS; AND (V) ITS RESTRICTIONS ARE NO GREATER THAN NECESSARY TO PROTECT THE LEGITIMATE BUSINESS INTERESTS OF THE EMPLOYER. A NON-COMPETE AGREEMENT THAT IS REASONABLE IN TIME PURSUANT TO SUBPARAGRAPH (I) OF THIS PARAGRAPH SHALL NOT CONTAIN A TERM OF RESTRICTION GREATER THAN ONE YEAR; AND (B) PROVIDE FOR THE PAYMENT OF SALARY DURING THE PERIOD OF ENFORCEMENT OF THE NON-COMPETE AGREEMENT.
See N.Y. S.B. S4641A, § 191-d(6)-(7) (2025-2026 Reg. Sess.) (pending).
Can an out-of-state choice-of-law clause avoid New York non-compete rules?
New York sets aside an out-of-state choice-of-law clause on public-policy grounds only when the chosen law is truly obnoxious to New York policy, and in Brown & Brown v. Johnson the Court of Appeals held that applying Florida law on restrictive covenants related to a former employee's non-solicitation of customers would violate New York public policy. On a touch screen, a tap shows all 2 sources in this group.
New York generally honors a contractual choice of law, but reserves a public-policy exception for foreign laws that are truly obnoxious to the state's own policy — and it held that applying Florida law to a former employee's customer non-solicitation covenant would violate New York public policy. On a touch screen, a tap shows all 2 sources in this group. Looking ahead, S4641A — a pending bill, not current law — would make unenforceable any choice-of-law or venue clause that avoids or limits the statute for covered workers who, for at least the thirty days before their employment ends, have resided or worked in New York .
Choosing another state's law for a New York-based worker may fail to displace New York's limits: where applying the chosen law would violate New York public policy, as the Court of Appeals held of Florida law in Brown & Brown, New York law governs. Governing law set to New York, with venue pointed at the Governing Law state, matches the choices to where the employee actually lives and works — a chosen law that is truly obnoxious to New York policy is disregarded, so a foreign clause cannot be counted on to displace New York's restrictive-covenant rules. On a touch screen, a tap shows all 2 sources in this group. The same public-policy screen cuts the other way: a covenant the employee entered under another state's law may not survive New York's, and a no-conflicting-obligations representation surfaces it before it becomes a dispute. And the pending S4641A bill would make unenforceable choice-of-law and venue clauses used to avoid the statute for covered workers who, for at least the thirty days before their employment ends, have resided or worked in New York — pending only, not law .
Sources for this answer
Brown & Brown holds that applying Florida law to a former employee's non-solicitation covenant would violate New York public policy, so New York law governs.
On this appeal, we hold that applying Florida law on restrictive covenants related to the non-solicitation of customers by a former employee would violate the public policy of this state.
See Brown & Brown, Inc. v. Johnson, 25 N.Y.3d 364 (2015).
Brown & Brown states that New York's public-policy exception to a contractual choice of law is reserved for foreign laws that are truly obnoxious.
This public policy exception is reserved "for those foreign laws that are truly obnoxious" (Cooney, 81 NY2d at 79; see Welsbach Elec. Corp., 7 NY3d at 629).
See Brown & Brown, Inc. v. Johnson, 25 N.Y.3d 364 (2015).
S4641A, if enacted, would make unenforceable a choice-of-law or venue provision that avoids or limits the statute if the covered individual is, and for at least thirty days immediately before leaving employment has been, a New York resident or employed in New York.
NO CHOICE OF LAW PROVISION OR CHOICE OF VENUE PROVISION THAT WOULD HAVE THE EFFECT OF AVOIDING OR LIMITING THE REQUIREMENTS OF THIS SECTION SHALL BE ENFORCEABLE IF THE COVERED INDIVIDUAL IS AND HAS BEEN, FOR AT LEAST THIRTY DAYS IMMEDIATELY PRECEDING THE COVERED INDIVIDUAL'S CESSATION OF EMPLOYMENT, A RESIDENT OF NEW YORK OR EMPLOYED IN NEW YORK.
See N.Y. S.B. S4641A, § 191-d(8) (2025-2026 Reg. Sess.) (pending).
Does a New York non-compete's restricted period pause (toll) during a breach or litigation?
In Delta Enterprise Corp. v. Cohen, a New York appellate court held that a preliminary injunction should not have deviated from the durational terms of an express contractual tolling clause extending the restrictions by the period of the employee's violation .
The covenant, including its extended duration, must still be reasonable in time .
In Delta Enterprise Corp. v. Cohen, the First Department held at the preliminary-injunction stage that the injunction should follow a confidentiality agreement's language automatically extending its restrictive periods by the time the employee was in violation. The court rejected the argument that the provision was unenforceable as a matter of law or violated public policy. The decision supports express contractual tolling, but its preliminary-injunction posture and the agreement before the court limit what it establishes about non-competes generally .
Because Delta turned on the agreement's express extension language, it does not establish that a court will pause or extend a restriction during breach or litigation when the agreement contains no tolling language .
If the parties intend breach to extend the restriction, the agreement should expressly provide that a breach extends the restriction, define the triggering violation, and tie the extension to the period of violation. Express language clarifies the intended operation, but it does not establish that a court will find the extended duration reasonable. On a touch screen, a tap shows all 2 sources in this group.
If enacted, S4641A would cap at one year the term of a non-compete subject to its enforceability requirements. It provides context for evaluating an extension, not current legal support .
Sources for this answer
At the preliminary-injunction stage, Delta Enterprise applied a confidentiality agreement's express provision automatically extending restrictive periods during the employee's violation and rejected a categorical public-policy challenge to the provision.
However, the preliminary injunction should not have deviated from the durational terms set forth in the confidentiality agreement's tolling provision because there was an abundance of unrefuted documentary evidence showing that it was likely that defendant had repeatedly breached multiple provisions of the agreement, and that he continued to do so after the motion court issued the temporary restraining order. The agreement's tolling provision provides for the tolling of the various restrictive periods "during any period in which Employee is in violation" of the restrictive covenants, and provides that "all restrictions shall automatically be extended by the period Employee was in violation of any such restrictions." We reject defendant's argument that such a provision is, as a matter of law, unenforceable or violates public policy especially where, as here, there was evidence that defendant consulted with counsel before executing the agreement, that he received $50,000 in consideration thereof, and there are significant and multiple indications of his bad faith (see Chernoff Diamond & Co. v Fitzmaurice, Inc., 234 AD2d 200, 202 [1996]; Maltby v Harlow Meyer Savage, 223 AD2d 516 [1996], lv dismissed 88 NY2d 874 [1996]).
See Delta Enter. Corp. v. Cohen, 93 A.D.3d 411, 412 (1st Dep't 2012).
OTG Management confirms that an anticompetitive covenant ancillary to employment must be reasonable in time and area to be enforceable.
In order to be enforceable, an anticompetitive covenant ancillary to an employment agreement must be reasonable in time and area, necessary to protect the employer’s legitimate interests, not harmful to the public, and not unreasonably burdensome to the employee.
See OTG Mgt., LLC v. Konstantinidis, 40 Misc. 3d 617 (Sup. Ct. N.Y. County 2013).
S4641A, if enacted, would provide that a non-compete that is reasonable in time under its enforceability standard may not contain a term of restriction greater than one year.
A NON-COMPETE AGREEMENT THAT IS REASONABLE IN TIME PURSUANT TO SUBPARAGRAPH (I) OF THIS PARAGRAPH SHALL NOT CONTAIN A TERM OF RESTRICTION GREATER THAN ONE YEAR
See N.Y. S.B. S4641A, § 191-d(7)(a) (2025-2026 Reg. Sess.) (pending).
What special non-compete rule applies to broadcast-industry employees in New York?
New York Labor Law § 202-k bars a broadcasting-industry employer from requiring, as a condition of employment, that a broadcast employee refrain from working in a geographic area, for a period of time, or for a competitor after employment ends .
This is the one place New York has a statutory non-compete prohibition rather than a common-law standard. The ban applies to post-employment restraints; it does not reach a covenant operating during the term of an employment contract . An employer who violates the section is civilly liable to the broadcast employee for damages, attorneys' fees, and costs .
The mistake is a post-employment restriction in a broadcast employee's covenant: a bar on working in a geographic area, for a period, or for particular employers or industries after the job ends. Requiring it as a condition of employment exposes a broadcasting industry employer to civil liability for damages, attorneys' fees, and costs . Confining the restraint to the term of the employment contract avoids that exposure .
Sources for this answer
Labor Law § 202-k prohibits a broadcasting industry employer from requiring, as a condition of employment, that a broadcast employee or prospective broadcast employee refrain from obtaining employment in a specified area, for a specific period, or with a particular employer or industry after the employment ends.
A broadcasting industry employer shall not require as a condition of employment, whether in an employment contract or otherwise, that a broadcast employee or prospective broadcast employee refrain from obtaining employment: (a) in any specified geographic area; (b) for a specific period of time; or (c) with any particular employer or in any particular industry; after the conclusion of employment with such broadcasting industry employer.
See N.Y. Lab. Law § 202-k(2).
Labor Law § 202-k applies only to post-employment restraints, not to covenants operating during the contract term.
This section shall not apply to preventing the enforcement of such a covenant during the term of an employment contract.
See N.Y. Lab. Law § 202-k(2).
Labor Law § 202-k(3) makes any person who violates the section civilly liable to the broadcast employee for damages, attorney's fees, and costs.
Any person who violates this section shall be civilly liable to a broadcast employee for damages, attorney's fees and costs.
See N.Y. Lab. Law § 202-k(3).
What are the key recent developments in New York non-compete law?
Neither the vetoed 2023 ban nor the pending S4641A has become law, and New York employee non-competes are generally tested under the common-law reasonableness standard that BDO Seidman adopted and the Attorney General's 2022 guidance restates, subject to Labor Law § 202-k's bar on broadcasting industry employers requiring post-employment non-competes of broadcast employees. On a touch screen, a tap shows all 5 sources in this group.
S3100A, a bill barring employers from seeking or accepting non-competes from covered individuals, was vetoed at the end of 2023, a new bill, S4641A, is pending, and a federal district court has barred enforcement of the FTC's non-compete rule. On a touch screen, a tap shows all 4 sources in this group. The FTC has since moved to dismiss its appeals and accede to the rule's vacatur .
- February 21, 2023: The National Labor Relations Board held in McLaren Macomb that simply offering employees severance terms that broadly waive rights under Section 7 of the National Labor Relations Act — including overbroad confidentiality and non-disparagement provisions — violates the Act. The federal overlay applies to covenant packages for non-supervisory employees regardless of how the covenant fares under New York law .
- December 22, 2023: Governor Hochul vetoed S3100A, which would have added Labor Law § 191-d to bar employers from seeking, requiring, demanding, or accepting a non-compete from any covered individual. On a touch screen, a tap shows all 2 sources in this group.
- June 9, 2025: The State Senate passed S4641A and sent it to the Assembly, where it remains pending. The bill would void non-competes for covered individuals, a term it defines to exclude highly compensated individuals: those whose average annualized cash compensation is at least $500,000 a year, a level adjusted each year beginning in 2027 for New York consumer prices. It would separately bar non-competes for health related professionals, and it would require every employer to post a notice of employees' rights under the section. On a touch screen, a tap shows all 5 sources in this group.
- September 5, 2025: The FTC moved to dismiss its appeals and accede to vacatur of the 2024 federal Non-Compete Clause Rule .
Confidentiality or non-disparagement language tightened by deleting the protected-activity carve-outs loses its safe footing. Under McLaren Macomb, merely offering an employee terms that broadly waive Section 7 rights — including overbroad confidentiality and non-disparagement provisions — violates the National Labor Relations Act, and the Board's reasoning turns on the breadth of the waiver, not the label of the document. The OpenAgreements New York restrictive covenant form carves Section 7 activity out of both its confidentiality and non-disparagement sections for this reason; a version that swept in wage discussion or other concerted activity would invite an unfair-labor-practice charge no matter how the covenant fares under New York law .
Sources for this answer
Labor Law § 202-k prohibits a broadcasting industry employer from requiring, as a condition of employment, that a broadcast employee or prospective broadcast employee refrain from obtaining employment in a specified area, for a specific period, or with a particular employer or industry after the employment ends.
A broadcasting industry employer shall not require as a condition of employment, whether in an employment contract or otherwise, that a broadcast employee or prospective broadcast employee refrain from obtaining employment: (a) in any specified geographic area; (b) for a specific period of time; or (c) with any particular employer or in any particular industry; after the conclusion of employment with such broadcasting industry employer.
See N.Y. Lab. Law § 202-k(2).
The NLRB held that offering severance terms that broadly waive Section 7 rights — including overbroad confidentiality and non-disparagement terms — violates the NLRA.
simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act violates Section 8(a)(1) of the Act.
See McLaren Macomb, 372 NLRB No. 58 (2023); NLRB Office of Public Affairs (Feb. 21, 2023).
S3100A would have banned employers from seeking or accepting non-competes from covered individuals, but was vetoed on December 22, 2023.
NO EMPLOYER OR ITS AGENT, OR THE OFFICER OR AGENT OF ANY CORPORATION, PARTNERSHIP, LIMITED LIABILITY COMPANY, OR OTHER ENTITY, SHALL SEEK, REQUIRE, DEMAND OR ACCEPT A NON-COMPETE AGREEMENT FROM ANY COVERED INDIVIDUAL.
See N.Y. S.B. S3100A, § 191-d(2) (2023-2024 Reg. Sess.) (vetoed Dec. 22, 2023).
S4641A, passed by the Senate and pending in the Assembly, would render non-competes accepted after its effective date null, void, and unenforceable for covered individuals.
ANY NON-COMPETE AGREEMENT SOUGHT, REQUIRED, DEMANDED OR ACCEPTED AFTER THE EFFECTIVE DATE OF THIS SECTION SHALL BE NULL, VOID, AND UNENFORCEABLE.
See N.Y. S.B. S4641A, § 191-d(2) (2025-2026 Reg. Sess.) (pending).
BDO Seidman describes the modern, prevailing common-law standard of reasonableness for employee agreements not to compete as a three-pronged test.
The modern, prevailing common-law standard of reasonableness for employee agreements not to compete applies a three-pronged test.
See BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 388 (1999).
The New York Attorney General's 2022 guidance states that a non-compete is enforceable only to the extent it is necessary to protect the employer's legitimate interests, imposes no undue hardship on the employee, does not harm the public, and is reasonable in time and geographic scope.
A non-compete is only allowed and enforceable to the extent it (1) is necessary to protect the employer’s legitimate interests, (2) does not impose an undue hardship on the employee, (3) does not harm the public, and (4) is reasonable in time period and geographic scope.
See N.Y. Att'y Gen., Non-Compete Agreements in New York State: Frequently Asked Questions (2022).
The Senate's action log records that S3100A passed both houses in June 2023, was delivered to the governor on December 12, 2023, and was vetoed on December 22, 2023 (veto memo 133).
[Senate action log: passed senate Jun 07, 2023; passed assembly Jun 20, 2023; delivered to governor Dec 12, 2023; vetoed memo.133 Dec 22, 2023.
See N.Y. S.B. S3100A (2023-2024 Reg. Sess.), Senate action log (vetoed memo 133, Dec. 22, 2023).
The Senate's action log records that S4641A passed the Senate and was delivered to the Assembly on June 9, 2025, and is pending in the Assembly Labor Committee in the 2025-2026 session.
[Senate action log: referred to labor Feb 10, 2025; passed senate, delivered to assembly, referred to labor Jun 09, 2025; in Assembly Labor Committee (pending, 2025-2026 session).
See N.Y. S.B. S4641A (2025-2026 Reg. Sess.), Senate action log (in Assembly Labor Committee).
S4641A would define a covered individual to exclude a highly compensated individual: one whose average annualized rate of cash compensation, determined from the three most recent W-2 (and, where applicable, K-1) statements, or from all such statements if employment lasted less than three years, is at least $500,000 a year, a level adjusted each calendar year beginning in 2027 based on the New York consumer price index.
(B) “COVERED INDIVIDUAL” MEANS ANY PERSON OTHER THAN A HIGHLY COMPENSATED INDIVIDUAL WHO, WHETHER OR NOT EMPLOYED UNDER A CONTRACT OF EMPLOYMENT, PERFORMS OR HAS PERFORMED WORK OR SERVICES FOR ANOTHER PERSON ON SUCH TERMS AND CONDITIONS THAT THEY ARE, IN RELATION TO THAT OTHER PERSON, IN A POSITION OF ECONOMIC DEPENDENCE ON, AND UNDER AN OBLIGATION TO PERFORM DUTIES FOR, THAT OTHER PERSON; (C) “HIGHLY COMPENSATED INDIVIDUAL” MEANS ANY INDIVIDUAL WHO IS COMPENSATED AT AN AVERAGE ANNUALIZED RATE OF CASH COMPENSATION DETERMINED BY THE INCOME LISTED ON THE INDIVIDUAL'S THREE MOST RECENT W-2 STATEMENTS AND, WHERE APPLICABLE, K-1 STATEMENTS, OR ALL SUCH STATEMENTS FROM THE DURATION OF THE INDIVIDUAL'S EMPLOYMENT IF THE TERM OF EMPLOYMENT IS LESS THAN THREE YEARS, EQUIVALENT TO OR GREATER THAN FIVE HUNDRED THOUSAND DOLLARS PER YEAR, PROVIDED THAT SUCH COMPENSATION LEVEL SHALL BE ADJUSTED EACH CALENDAR YEAR, BEGINNING IN TWO THOUSAND TWENTY-SEVEN, BASED ON THE INCREASE, IF ANY, IN THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS FOR NEW YORK STATE, WITH THE BASE YEAR OF TWO THOUSAND TWENTY-SIX;
See N.Y. S.B. S4641A, § 191-d(1)(b)-(c) (2025-2026 Reg. Sess.) (pending).
S4641A would bar employers from seeking, requiring, demanding or accepting a non-compete from any covered individual or health related professional, subject to the bill's separate exception for covenants in the sale of a business's goodwill or a majority ownership interest.
NO EMPLOYER OR ITS AGENT, OR THE OFFICER OR AGENT OF ANY CORPORATION, PARTNERSHIP, LIMITED LIABILITY COMPANY, NOT-FOR-PROFIT CORPORATION OR ASSOCIATION OR OTHER ENTITY, SHALL SEEK, REQUIRE, DEMAND OR ACCEPT A NON-COMPETE AGREEMENT FROM ANY COVERED INDIVIDUAL OR HEALTH RELATED PROFESSIONAL.
See N.Y. S.B. S4641A, § 191-d(2) (2025-2026 Reg. Sess.) (pending).
S4641A would require every employer to inform employees of their protections and rights under the section by posting a notice.
EVERY EMPLOYER SHALL INFORM THEIR EMPLOYEES OF THEIR PROTECTIONS AND RIGHTS UNDER THIS SECTION BY POSTING A NOTICE THEREOF PURSUANT TO SECTION FORTY-FIVE OF THIS CHAPTER.
See N.Y. S.B. S4641A, § 191-d(9) (2025-2026 Reg. Sess.) (pending).
The FTC took steps to dismiss its appeals and accede to vacatur of the 2024 federal Non-Compete Clause Rule.
Today the Federal Trade Commission took steps to dismiss its appeals in Ryan, LLC v. FTC, No. 24-10951 (5th Cir.), and Properties of the Villages v. FTC, No. 24-13102 (11th Cir.), and to accede to the vacatur of the Non-Compete Clause Rule.
See FTC, Press Release, FTC Files to Accede to Vacatur of Non-Compete Clause Rule (Sept. 5, 2025).
The FTC reports that the district court found the agency lacked authority to issue the Non-Compete Clause Rule and prohibited enforcement of the Rule.
The district court found that the FTC does lack the authority, and prohibited enforcement of the Rule.
See FTC, Press Release, FTC Files to Accede to Vacatur of Non-Compete Clause Rule (Sept. 5, 2025).
What does federal law require a non-compete or confidentiality agreement in New York to say about whistleblowers and pay?
An employee confidentiality, non-compete, or invention assignment agreement signed or updated now that governs trade secrets or other confidential information must give the Defend Trade Secrets Act whistleblower-immunity notice, and for employees the National Labor Relations Act covers, Section 7 of that Act protects concerted activity, including joining together over pay and working conditions, that a broad confidentiality clause can restrict. The employer may satisfy the notice duty by cross-referencing a qualifying policy document provided to the employee, but an employer that omits the notice may not be awarded exemplary damages or attorney fees under the Defend Trade Secrets Act in an action against an employee who was not given notice.
The notice describes a federal immunity: an individual cannot be held liable under federal or state trade-secret law for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing made under seal. For an agreement signed or updated now, the duty to give that notice reaches any agreement with an employee that governs trade secrets or other confidential information, whatever else the agreement does.
Section 7 gives employees the National Labor Relations Act covers a statutory right to engage in concerted activity for mutual aid or protection, including joining together to improve pay and working conditions. For employees the Act covers, the Board's work-rule standard adopted in 2023 makes a rule presumptively unlawful if it has a reasonable tendency to chill employees from exercising their Section 7 rights; an employer can rebut that presumption only by showing a legitimate and substantial business interest it cannot serve with a more narrowly tailored rule. The 2023 standard may change, but the Section 7 right it enforces is statutory. State law may add its own requirements for the same clauses.
A form carried over without the immunity notice, or a cross-reference to a reporting policy the employee never received, leaves the confidentiality clause without a valid notice, so the Act's exemplary damages and attorney fees are unavailable against that employee. A Confidential Information definition that sweeps in pay and working conditions with no carve-out exposes the employer to an unfair-labor-practice finding for employees the Act covers.
Sources for this answer
An individual is immune from criminal and civil liability under federal and state trade-secret law for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing made under seal.
An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that— (A) is made— (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
See 18 U.S.C. § 1833(b)(1).
An employer must give notice of the trade-secret whistleblower immunity in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
An employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
See 18 U.S.C. § 1833(b)(3)(A).
An employer complies with the notice requirement by cross-referencing a policy document, provided to the employee, that sets out the employer's reporting policy for a suspected violation of law.
An employer shall be considered to be in compliance with the notice requirement in subparagraph (A) if the employer provides a cross-reference to a policy document provided to the employee that sets forth the employer's reporting policy for a suspected violation of law.
See 18 U.S.C. § 1833(b)(3)(B).
An employer that does not give the required notice may not be awarded exemplary damages or attorney fees in a trade-secret action against an employee who did not receive it.
If an employer does not comply with the notice requirement in subparagraph (A), the employer may not be awarded exemplary damages or attorney fees under subparagraph (C) or (D) of section 1836(b)(3) in an action against an employee to whom notice was not provided.
See 18 U.S.C. § 1833(b)(3)(C).
Section 7 gives employees the right to engage in concerted activities for mutual aid or protection, the statutory basis for keeping discussion of pay and working conditions outside confidentiality restrictions.
Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 158(a)(3) of this title.
See 29 U.S.C. § 157 (NLRA § 7).
The National Labor Relations Board protects the right of private-sector employees, with or without a union, to join together to improve wages, benefits, and working conditions.
Established in 1935, the National Labor Relations Board is an independent federal agency that protects employees from unfair labor practices and protects the right of private sector employees to join together, with or without a union, to improve wages, benefits and working conditions.
See NLRB Office of Public Affairs, news release of Feb. 21, 2023 (agency mission statement).
Under the work-rule standard the Board adopted in 2023, a rule with a reasonable tendency to chill employees from exercising their Section 7 rights is presumptively unlawful unless the employer proves a legitimate and substantial business interest it cannot advance with a more narrowly tailored rule.
Under the new standard adopted in Stericycle, the General Counsel must prove that a challenged rule has a reasonable tendency to chill employees from exercising their rights. If the General Counsel does so, then the rule is presumptively unlawful. However, the employer may rebut the presumption by proving that the rule advances a legitimate and substantial business interest and that the employer is unable to advance that interest with a more narrowly tailored rule.
See Stericycle, Inc., 372 NLRB No. 113 (2023); NLRB Office of Public Affairs, Board Adopts New Standard for Assessing Lawfulness of Work Rules (Aug. 2, 2023).