Can New York Employers Still Enforce a Non-Compete? What a New York Business Law Attorney Looks For

Yes, but the version that gets enforced looks very different from the one most employers have sitting in their onboarding packet. Between a vetoed state ban, a federal rule that never took effect, and a body of case law that was already skeptical of broad restrictions, the question a New York business law attorney gets asked is rarely whether non-competes are legal. It is whether this particular clause, against this particular employee, protects something a court will recognize. Most do not, and the ones that fail usually fail on the same few points.

Did New York ban non-competes?

No. Governor Hochul vetoed the legislature’s near total ban on December 22, 2023, citing the absence of an income threshold that would have exempted higher earning employees. Similar bills have been introduced in every session since, including versions that would prohibit non-competes below a compensation floor, and none has become law.

New York has moved only at the edges. State law now bars non-compete agreements for broadcast industry employees, and the Attorney General’s office has taken an interest in restrictive covenants imposed on hourly and low wage workers. Because a statutory ban keeps resurfacing in Albany, confirm the current state of the legislation before relying on an agreement signed years ago.

What happened to the FTC’s nationwide non-compete ban?

It never took effect. The Federal Trade Commission’s Non-Compete Clause Rule, announced in April 2024, would have voided most existing non-competes as of September 4, 2024. A federal judge in the Northern District of Texas set the rule aside on a nationwide basis in August 2024 in Ryan LLC v. FTC.

The Commission later abandoned its appeals and shifted toward case by case enforcement against individual employers rather than a blanket rule. The practical effect for New York businesses is that enforceability turns on state common law, which was never particularly generous to begin with.

What makes a non-compete enforceable in New York?

New York courts apply the standard from BDO Seidman v. Hirshberg, decided by the Court of Appeals in 1999. A restrictive covenant is enforceable only to the extent it is reasonable in time and geographic scope, no greater than necessary to protect the employer’s legitimate interest, not unduly burdensome to the employee, and not harmful to the public.

The word doing the most work is legitimate. New York recognizes a narrow set of protectable interests: trade secrets and genuinely confidential customer information, and the services of an employee whose abilities are unique or extraordinary. Preventing ordinary competition is not one of them. A salesperson who leaves with nothing but general industry knowledge and her own skill is generally free to compete, even if the departure costs the former employer money. Publicly available client lists and readily ascertainable contacts do not become confidential because an agreement labels them that way.

How long can a non-compete last in New York?

For ordinary employment, restrictions in the six month to one year range are the ones courts most often accept, and periods beyond that require a specific justification tied to how long the protected information stays valuable. There is no statutory maximum, so the analysis is entirely about fit.

The context changes the math. A covenant given by the seller of a business, where the buyer paid for goodwill, receives noticeably more deference, and multi year terms are routinely upheld in that setting. Courts read a covenant signed by a departing employee under threat of termination very differently from one negotiated as part of an eight figure sale.

Can an employer enforce a non-compete against someone it fired?

Usually not, if the termination was without cause. New York courts have declined to enforce restrictive covenants where the employer ended the relationship and then sought to bar the former employee from working, reasoning that the employer cannot cut off the employee’s livelihood and simultaneously restrict the alternative.

A related principle cuts the other way for employees who resign. Under the employee choice doctrine, a forfeiture provision in a benefit or equity plan, where the employee gives up unvested compensation by competing, can be enforced without the usual reasonableness review, provided the employee left voluntarily and the employer was willing to continue the employment. Structuring the restriction as a choice between money and competition rather than as a prohibition sometimes survives where a flat ban would not.

What does a court do with a non-compete that goes too far?

It may cut the clause down instead of striking it. BDO Seidman allows partial enforcement of an overbroad covenant, but conditions it on the employer’s conduct. Where there is no evidence of overreaching, coercive use of superior bargaining power, or other anticompetitive misconduct, a court can narrow the restriction and enforce what remains.

That case is a useful illustration. The court kept the non-solicitation clause but limited it to clients the accountant had actually served through the firm, releasing him as to clients he had brought with him and those he had never worked with. Employers who draft a covenant deliberately broad in the hope of judicial rescue often forfeit that possibility.

What a New York business law attorney drafts instead of a broad non-compete

The tools that survive scrutiny tend to be narrower and more specific:

• A customer non-solicitation limited to clients the employee personally serviced during a defined lookback period
• Employee non-solicitation and anti-raiding provisions, which face less resistance than outright competition bans
• Confidentiality obligations tied to identified categories of information, supported by real internal safeguards. New York has no version of the Uniform Trade Secrets Act, so trade secret claims rest on common law plus the federal Defend Trade Secrets Act of 2016
• Notice periods and garden leave, where the employer keeps paying during the restricted stretch
• Invention assignment and work product clauses, which resolve ownership questions a non-compete never reaches

Consideration matters too. Continued at will employment is thin support for a new restriction imposed mid tenure, and a covenant introduced without a raise, promotion, or equity grant is an easier target.

New York non-competes remain enforceable, just not as written in most agreements, and a clause drafted before 2024 is worth a fresh look given how much has shifted around it. Whether you are an employer trying to protect client relationships or an executive weighing an offer against a signed restriction, the outcome depends on specifics: what information you actually hold, how the relationship ended, and how narrowly the covenant is drawn. A New York business law attorney can assess whether your restrictive covenants would hold up, revise the ones that would not, and evaluate your exposure before a dispute reaches a courtroom.