I know. It’s nearly July 4th weekend. No one REALLY wants to hear about employment law in Connecticut.
So for this post, let’s go right over the border to New York where something very interesting is taking place.
Last week, the NY legislature passed a ban on non-compete agreements. Now, before you rip up such agreements, the Governor has not yet signed the bill. (If she does, the law will go into effect in 30 days from signing.)
The new law will prohibit employers from seeking, requiring, demanding or accepting a non-compete agreement from any person who performs work or services for another person on such terms and conditions that they are in a position of economic dependence on and have an obligation to perform duties for.
Noncompete agreements are broadly defined as an agreement that prohibits or restricts that employee from obtaining employment after they leave employment.
The law voids any contract which restrains anyone from engaging in a lawful profession, trade or business of any kind.
The law creates a cause of action against employers allowing the employee to recover compensatory damages, liquidated damages of up to $10,000, attorneys’ fees and costs.
As written, there are still open questions about this law. For example, will this apply to agreements that arise from a sale of a business? Will these types of agreements be allowed in independent contractor relationships? Will current non-compete agreements be deemed to be void as a matter of public policy? The language of the law suggests that this will be forward-looking but expect challenges to arise.
To be sure, confidentiality provisions and non-solicitation provisions would still be allowed but the law hints that these provisions may still be struck down if they are de-facto non-compete agreements.
For Connecticut-based employers with New York employees (whether remote or in-person) or New York employers, this should be a wake up call to review your existing agreements immediately and make sure you will be in compliance if this law is signed. Also, if your employment agreements say that New York law applies, this new law is going to have a direct impact as well.
This law may also be a precursor to the 2024 legislative session in Connecticut. While the General Assembly did not pass such a law this year, legislators may be more willing to consider the measure now that adjacent states (New York, Rhode Island and Massachusetts) have also passed some restrictions on non-compete agreements.