New York's Noncompete Ban Bill Just Passed the Senate Again: What Employees Should Do While It Sits in the Assembly

Last reviewed: June 2026 — the bill is pending in the Assembly and the legislative session is in its final days. We will update this analysis when the Assembly acts, or doesn’t.

Key Takeaways

• The New York noncompete ban is one vote and one signature away — again. The Senate passed the current vehicle, S9759, on June 3, 2026 (40–21). It is substantively identical to S4641A, which passed the Senate in June 2025 and stalled in the Assembly. As of this writing the Assembly has not voted; the same-as bill (A10023) sits in the Assembly Labor Committee.
• The bill would add a new Labor Law §191-d banning employers from seeking, requiring, demanding, or accepting noncompetes from most workers, with carve-outs for highly compensated individuals (averaging $500,000+/year in cash compensation, CPI-indexed) and sale-of-business noncompetes (sellers of a 15%+ ownership stake).
• There is no federal noncompete ban. None. The FTC’s 2024 rule never took effect, the agency abandoned its appeals in September 2025, and on February 12, 2026 the rule was formally removed from the Code of Federal Regulations. State law is the whole game now.
• Until a bill is signed, your noncompete is governed by New York common law: the BDO Seidman reasonableness test. Many New York noncompetes are vulnerable under that test today, ban or no ban.
• The bill is prospective only. Even if signed, it would void noncompetes entered into after its effective date (30 days post-enactment). It would not automatically rescue anyone who signed one last year.
• Governor Hochul vetoed a broader ban on December 22, 2023. The current bill’s $500,000 carve-out is the legislature’s answer to her stated objection. Whether it is enough remains an open question; she has not tipped her hand.

New York is closer to banning most noncompete agreements than it has been at any point since December 2023. That sentence needs an asterisk, because in December 2023 the legislature actually got a ban to the Governor’s desk and she vetoed it.

This time the bill is narrower, the federal alternative has collapsed entirely, and the Senate has now passed the measure in two consecutive sessions. On June 3, 2026, the Senate passed S9759 by a vote of 40–21 and sent it to the Assembly, where its same-as companion (A10023) is parked in the Labor Committee with the session clock running out.

That repeats almost exactly what happened in 2025, when the predecessor bill, S4641A, sponsored by Senator Sean Ryan, passed the Senate 40–22 on June 9, 2025 and then died in the Assembly Labor Committee. Senator Michael Gianaris re-introduced the substantively identical S9759 in April 2026, and it moved fast: Labor Committee on May 5, third reading by May 7, floor passage June 3.

I represent employees in restrictive-covenant disputes, and I take calls from employers’ counsel about the same agreements. The person across my desk is rarely a $500,000 executive. It is usually someone making $85,000 who is afraid to accept a better offer because of two paragraphs in a form they signed on their first day, years ago, without a lawyer. This article is written for that person — the worker holding a noncompete or a cease-and-desist letter — though there is a sidebar for the management bar too, because the practical advice on both sides turns on the same unstable legal ground.

What S4641A / S9759 Would Actually Do

The bill amends the Labor Law by adding a new §191-d, captioned “Non-Compete Agreements.” The operative prohibition is broad: no employer — or officer or agent of any corporation, partnership, or LLC — may seek, require, demand, or accept a noncompete agreement from a “covered individual” or a “health related professional.” Note the verb “accept”: under the bill as written, even a noncompete the employee offers up voluntarily is off the table for covered workers.

A few structural points matter more than the headline:

• “Covered individual” is defined by economic dependence, not job title. The bill reaches workers who are economically dependent on the employer and perform work under conditions of dependence, language that sweeps in many people who are labeled independent contractors. If you work in the gig economy, that intersects with the classification fights we covered in our 2026 gig worker and independent contractor analysis.
• The $500,000 carve-out is an average-cash-compensation test, indexed to inflation. “Highly compensated individuals” — those averaging $500,000 or more per year in cash compensation, with the threshold adjusted annually based on the consumer price index — are excluded from the ban. Equity that hasn’t been paid out as cash is a live interpretive question; expect litigation over what counts toward the average if this becomes law.
• Health-related professionals are protected regardless of income. A physician earning $700,000 gets the ban’s protection even though a similarly paid executive does not. That is a deliberate policy choice about patient access, and it survived from the 2025 version intact.
• The sale-of-business exception requires real skin in the game. A seller disposing of at least a 15% ownership interest can still be bound by a sale-of-business noncompete. The minority partner with 2% who gets a noncompete stapled to a transaction would not fit the exception as drafted.
• Even permitted noncompetes get statutory guardrails. For the agreements the bill still allows, Sullivan & Cromwell’s analysis notes the restriction cannot exceed one year and the employer must pay the worker during the restricted period: a paid garden-leave requirement. More on that wrinkle below.
• Teeth. A covered individual could bring a civil action to void the agreement and seek lost compensation, liquidated damages of up to $10,000, and attorneys’ fees, within a two-year window keyed to discovery of the violation. Liquidated damages per worker, plus fee-shifting, is what turns a statute into a compliance program.
• What the bill does NOT ban: agreements protecting trade secrets, agreements protecting confidential client information, and client non-solicitation agreements, provided they do not “otherwise restrict competition.” That proviso is where the next decade of New York restrictive-covenant litigation will live if the bill passes, because employers will redraft noncompetes as aggressive non-solicits and courts will have to police the line.

The Federal Collapse: Why the FTC Rule Is Gone and Why That Makes Albany the Whole Game

For about four months in 2024, American workers were told a federal agency had banned almost every noncompete in the country. Here is what actually happened, because the wreckage explains why this Albany bill matters so much.

In April 2024, the FTC announced its Non-Compete Clause Rule, 16 C.F.R. Part 910, which would have rendered the vast majority of existing noncompetes unenforceable nationwide and banned new ones, with a September 4, 2024 effective date. It never took effect. A federal district court in Texas set the rule aside nationwide before the effective date, holding the Commission had exceeded its rulemaking authority. The FTC initially appealed. Then, under new leadership, it voted 3–1 on September 5, 2025 to dismiss its appeals and accede to the vacatur. The final housekeeping came on February 12, 2026, when the Commission formally removed the Non-Compete Rule from the Code of Federal Regulations to conform the CFR to the court decisions. The FTC’s own rule page now states flatly that the rule “is not in effect and it is not enforceable.”

Two practical consequences for a New York worker:

First, anything you read in 2024 about “the FTC banned noncompetes” is dead. If you declined to negotiate a noncompete in 2024 because you believed it would be federally void, that assumption no longer holds. The FTC has signaled it may still pursue case-by-case enforcement against particular noncompete practices under Section 5 of the FTC Act, but there is no rule, no blanket ban, and no private federal remedy for an ordinary worker.

Second, the states are now the entire battleground, and they have been moving. California, Minnesota, North Dakota, and Oklahoma ban most employment noncompetes outright; a dozen-plus states impose income thresholds. New York, despite hosting one of the highest concentrations of noncompete-bound workers in the country, currently has no noncompete statute at all. S4641A/S9759 is the legislature’s second attempt to change that since the federal rule collapsed. This is the same federal-retreat / state-advance dynamic we mapped in the two-front war facing New York employers in 2026: Washington pulls back, Albany pushes in.

What Is Actually Enforceable in New York TODAY, While the Bill Is Pending

Here is the part most coverage skips, and the part that matters if you have a noncompete sitting in your drawer right now: New York noncompetes are already disfavored under common law, and many of them fail the existing test.

Since BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (1999), New York courts enforce an employment noncompete only to the extent it is reasonable, and the Court of Appeals framed reasonableness as a three-part inquiry. Stated generally (every case turns on its facts, and this is an area where small factual differences change outcomes):

1. The restraint must be no greater than required to protect a legitimate interest of the employer. Critically, New York recognizes only a narrow band of legitimate interests in this context: chiefly protection of trade secrets and confidential information, protection of client relationships the employee was paid to develop, and protection against competition by an employee whose services are genuinely unique or extraordinary. “We trained her and don’t want her competing” is not, by itself, a legitimate interest.
2. The restraint must not impose undue hardship on the employee. A restriction that effectively exiles you from your trade in your geographic market gets hard judicial scrutiny.
3. The restraint must not harm the public. This factor has the most bite for physicians and other professionals whose clients/patients have an interest in continued access.

A few practitioner-level corollaries, all hedged because they are fact-dependent:

• Overbreadth is common. Form noncompetes handed to mid-level employees frequently fail the legitimate-interest prong because the employer cannot articulate a trade secret or unique-services rationale. The agreement exists to deter, not to protect.
• Partial enforcement is possible but not automatic. New York courts may blue-pencil an overbroad covenant down to a reasonable scope, but BDO Seidman makes that discretionary and disfavors it where the employer overreached or used coercive bargaining tactics. An employer who hands a sweeping form noncompete to everyone is gambling that a court will rewrite it, and courts do not always indulge that gamble.
• Termination without cause changes the calculus. New York case law has long suggested that an employer who fires a worker without cause may have a substantially harder time enforcing a noncompete against that worker. If you were laid off and are now being threatened with enforcement, that fact belongs at the top of your lawyer’s analysis. It also pairs with whatever wrongful termination claims you may independently hold.
• The agreement still has in terrorem power even when it’s weak. Most noncompete fights never reach a judge. They are resolved by cease-and-desist letters, scared new employers, and rescinded offers. That asymmetry — the employer needs only to frighten, the employee needs to litigate — is exactly what the pending bill’s liquidated-damages provision is designed to rebalance.

If You’re Being Asked to Sign a Noncompete Right Now

The bill’s pendency creates a strange negotiating window: employers know a ban may be weeks or months away, and some are pushing paper now to get agreements signed before any effective date. Remember, the bill is prospective. An agreement signed today would not be voided by it. What you sign now may matter for years. Practical steps:

One more point that surprises people: refusing to sign can carry consequences. New York is an at-will state, and an employer can generally condition new or continued employment on signing a restrictive covenant. That is a business decision for you, but make it with a clear-eyed read of what the document actually restrains and whether it would survive BDO Seidman scrutiny. That’s a conversation to have with an employment lawyer, not with the HR portal’s checkbox.

If You’re Being Threatened With Enforcement

The other side of the intake call: you left (or were pushed out), you took or want to take a new job, and a letter arrives, addressed to you, your new employer, or both. Sequence matters:

1. Do not ignore the letter, and do not answer it yourself. Anything you write will be Exhibit A. The single most damaging thing departing employees do is fire off an indignant email conceding facts (“I only took my own contacts…”).
2. Quarantine the data question immediately. Enforcement letters almost always pair the noncompete claim with a trade-secret/confidential-information claim, because that second claim is stronger. If you copied files, synced a drive, or emailed yourself anything on the way out, tell your lawyer on day one. Forensics will find it; your credibility depends on disclosing it first.
3. Audit the employer’s side of the ledger. Were you terminated without cause? Did the employer breach first: unpaid commissions, an unpaid bonus, shorted wages? An employer’s own material breach can undermine enforcement, and unpaid-compensation claims are independent leverage. Our wage and hour practice regularly finds offsetting claims in exactly these files.
4. Loop in the new employer’s counsel early, and strategically. New employers spook easily, but a measured response letter explaining why the covenant fails the reasonableness test often ends the matter. Most of these disputes die in correspondence.
5. Calendar the realities. A noncompete fight at the preliminary-injunction stage moves in weeks, not years. If the former employer files, they will seek a TRO fast. Have your evidence — offer letter, job description showing non-overlap, the negotiation file — assembled before they file, not after.

Every one of these steps is fact-specific, and nothing here is a substitute for advice on your actual documents. The consult is free; guessing is not: (516) 750-0595.

The Garden-Leave and Forfeiture Wrinkles (Briefly)

Two adjacent doctrines deserve a flag, with heavy hedging because both are evolving:

Garden leave. The pending bill would require employers to pay highly compensated individuals during any permitted restricted period, effectively importing paid garden leave into New York statute for the first time. Some sophisticated employers already use contractual garden-leave structures (extended notice periods with pay) instead of conventional noncompetes, partly because paying the employee dramatically improves the optics and the enforceability analysis. If your agreement pays you to sit out, courts view it differently than one that simply forbids you to work. How the bill’s garden-leave mechanics would operate in practice — what counts as the required payment, what happens if the employer stops paying — is genuinely unsettled and would await regulations and case law.

Forfeiture-for-competition. New York’s “employee choice” doctrine has historically treated forfeiture provisions — you may compete, but you forfeit deferred compensation or unvested equity if you do — more leniently than outright noncompetes, at least where the employee left voluntarily. (An involuntary termination generally changes the analysis.) Whether the pending bill would reach forfeiture-for-competition clauses, or leave the employee-choice doctrine intact as a workaround, is one of the open drafting questions the management bar is already gaming out. If a chunk of your compensation is deferred or unvested, get specific advice before you resign; the noncompete may be the least of the document’s restraints. (Executives near the $500,000 line should also understand how the highly compensated employee exemption works in the wage-hour context. Same phrase, completely different statute, frequently confused.)

Timeline: From Hochul’s Veto to Today

Sidebar for Employer Counsel: What to Tell Clients This Month

How This Fits the Bigger 2026 New York Employment Picture

The noncompete bill is not an isolated event. Albany’s 2025–2026 output — pay transparency enforcement, expanded worker protections, the classification fights — adds up to the most active state-level employment-law expansion in years, running directly against the federal deregulatory current. The same divergence is playing out in harassment law, where the EEOC rescinded its harassment guidance in January while New York’s protections held firm. For the wider context, start with our 2026 New York employment law changes guide for Long Island workers and the pay transparency compliance analysis. Remote and hybrid workers should note the bill’s reach — it covers remote workers reporting into New York, which folds in the choice-of-law questions we flagged in our remote work employment law primer.

Frequently Asked Questions

Are noncompete agreements enforceable in New York right now?

Sometimes, and that word is doing a lot of work. New York currently has no noncompete statute; enforceability is governed by the common-law reasonableness test from BDO Seidman v. Hirshberg. A noncompete is enforceable only to the extent it protects a recognized legitimate interest (trade secrets, confidential information, client relationships the employee developed, or truly unique services), doesn’t impose undue hardship on the worker, and doesn’t harm the public. Many form noncompetes given to ordinary employees fail this test, but each agreement turns on its facts. Get yours reviewed before assuming either way.

Did New York ban noncompete agreements in 2026?

Not yet. The Senate passed the ban bill (S9759, the successor to S4641A) on June 3, 2026 by a 40–21 vote, but as of mid-June 2026 the Assembly has not voted; the same-as bill, A10023, is in the Assembly Labor Committee. Even if both houses pass it, Governor Hochul would have to sign it, and she vetoed a broader version in December 2023. The bill is not law, and nothing in it changes your rights today.

Who would be exempt from the New York noncompete ban?

Two main groups: “highly compensated individuals” — workers averaging $500,000 or more per year in cash compensation, a threshold indexed annually to the consumer price index — and sellers of at least a 15% ownership stake in a business sale. Health-related professionals are protected by the ban regardless of how much they earn. Trade-secret agreements, confidentiality agreements, and client non-solicitation agreements would also remain lawful so long as they don’t otherwise restrict competition.

Would the New York noncompete ban void my existing noncompete?

No. The bill is prospective: it voids noncompete agreements entered into after its effective date (30 days after signing). An agreement you signed before that date would still be governed by the existing common-law reasonableness test. That is precisely why some employers are pushing employees to sign agreements now, while they still can, and why you should have anything you’re handed in 2026 reviewed before signing.

Is there still a federal ban on noncompetes from the FTC?

No. The FTC’s 2024 Non-Compete Clause Rule never took effect: a federal court set it aside nationwide before its September 2024 effective date, the FTC voted in September 2025 to drop its appeals, and on February 12, 2026 the agency formally removed the rule from the Code of Federal Regulations. The FTC has indicated it may pursue individual enforcement actions in egregious cases, but there is no federal rule and no general federal protection. Your rights depend on state law.

What should I do if my former employer sends a cease-and-desist letter about my noncompete?

Don’t respond on your own, and don’t ignore it. Preserve everything — the agreement, your offer letter, your separation paperwork, and any files or emails touching the dispute — and get the letter to an employment attorney quickly, because these disputes move at injunction speed if they go to court. Key early questions: were you terminated without cause, did the employer owe you unpaid wages or bonuses, and does the covenant actually protect a legitimate interest? Most of these fights are won or lost in the first two weeks of correspondence.

Talk to Us Before You Sign — or Before You Respond

If you’ve been handed a noncompete, threatened with one, or you’re sitting on an offer you’re afraid to accept because of one, the analysis is fact-specific and the timing is unforgiving. The Law Office of Jason Tenenbaum, P.C. reviews restrictive covenants, responds to enforcement threats, and pairs the covenant analysis with the claims employees too often leave on the table — discrimination and retaliation, wrongful termination, and unpaid wages, overtime, and commissions. The consultation is free and confidential: call (516) 750-0595 or contact us online.

For attorneys: we accept restrictive-covenant matters on a co-counsel and referral basis, handle per-diem appearances, and brief appellate and injunction-stage issues for both plaintiff-side and management-side firms that need a New York restrictive-covenant specialist on short notice. Attorney inquiries are answered same day.

This article discusses pending legislation and general legal principles. It is not legal advice, and pending bills change — sometimes the week after an article publishes. The status described here is current as of mid-June 2026.