Are Non-Competes Enforceable in New York?

What is the current legal status of non-compete agreements in the United States and New York?

Non-compete agreements remain generally legal in the United States and in New York, but their enforceability is tightly limited by state law and public policy. In New York, courts enforce non-competes only when they are narrowly tailored, protect a legitimate business interest, and do not unfairly burden the employee or the public.

Across the United States, non-compete law is state-specific:

• Broad bans: States like California, Oklahoma, and North Dakota largely ban employee non-competes by statute.
• Partial limits: Many states restrict non-competes by occupation (for example, physicians), income level, or require special consideration.
• Case-law driven states: New York follows judge-made rules, not a comprehensive non-compete statute, so reasonableness is decided case by case.

Key New York features as of my latest information (late 2024):

• No general non-compete statute; courts follow common law standards from cases like BDO Seidman v. Hirshberg.
• Non-competes must be:
  • Necessary to protect a legitimate interest (trade secrets, truly confidential information, or customer goodwill the employer paid to develop).
  • Reasonable in duration, geographic scope, and activities restricted.
  • Not harmful to the public, and not more burdensome to the employee than needed.
• New York courts are skeptical of non-competes for lower-paid workers or standard roles that do not involve real competitive risk.

At the federal level, the U.S. Federal Trade Commission has proposed a nationwide non-compete rule, but it has been heavily litigated and, as of my last update, has not produced a final, settled nationwide ban. Employers must therefore continue to plan primarily around state law, with New York being one of the more restrictive, employee-favorable jurisdictions in its case law even without a full statutory ban.

What is the status of New York's proposed non-compete ban (S4641A) as of 2026?

As of my last knowledge update in late 2024, New York's broad non-compete ban bill, often referenced as S4641A or S3100A, had been passed by the legislature but vetoed by Governor Hochul in December 2023. There was no comprehensive statutory ban on non-competes in effect in New York at that time, and common law rules continued to govern.

I cannot reliably report events or legislative changes that may have occurred in 2025 or 2026. However, you can track the bill's status and any successor bills through official channels and adjust your policies if a new law takes effect.

What happened to the original New York non-compete ban bill?

• The legislature passed a bill that would have broadly barred non-competes for almost all employees, with narrow exceptions.
• Governor Hochul signaled concern that the bill was too broad and did not carve out highly compensated executives and deal-related situations.
• In December 2023 she vetoed the bill, which meant:
  • No statewide ban took effect.
  • Existing case law continued to apply.
  • Legislators indicated they might rework and reintroduce a narrower bill.

How should employers plan amid legislative uncertainty?

Even without a statutory ban, trends in New York point in one direction: narrow, role-specific restrictions aimed at senior or highly compensated employees are safer; boilerplate non-competes for broad employee groups are legally risky and commercially unwise.

1. Monitor legislation annually:
   • Check the New York State Senate and Assembly bill tracking sites for "non-compete" and "restrictive covenant."
   • Watch for any bill that introduces income thresholds (for example, limiting non-competes to employees above a defined annual compensation level).
2. Align with likely future direction:
   • Phase out non-competes for lower-wage and mid-level employees even before any formal ban.
   • Shift to non-solicitation, confidentiality, and trade secret protection strategies (discussed below).
3. Build flexibility into your contracts:
   • Add severability clauses so if a non-compete becomes illegal, other provisions survive.
   • Use "step-down" language in scope or duration so a court can enforce a narrower restriction instead of voiding it entirely.

How does the New York "Janitor Rule" limit broad non-compete agreements?

The "Janitor Rule" in New York means a non-compete cannot stop a former employee from working for a competitor in any role, including roles unrelated to their former duties. A restriction that would bar an ex-employee from taking a low-level or unrelated job at a competitor almost always exceeds New York's reasonableness standard and will likely be struck down.

What is the origin of the Janitor Rule?

• The phrase comes from judicial criticism of overbroad restrictions that, in effect, would even prevent a former employee from working as a janitor for a competitor.
• The leading New York case, BDO Seidman v. Hirshberg, rejected a "one size fits all" non-compete that applied whenever the employee worked for any competitor anywhere.
• Courts have consistently held that restraints must link directly to the employee's actual role, functions, and access to protectable interests.

How does the Janitor Rule apply in practice?

Courts look carefully at what the employee actually did and what the agreement bars:

• Role-specific mismatch: If an employee managed New York accounts, a non-compete that bars them from any job at any global competitor, in any department, is likely unenforceable.
• Unrelated activities: A software sales executive cannot be barred from joining a competitor's HR team unless the employer can tie that move to misuse of secrets or customer goodwill.
• Overinclusive definitions of "competitor": Defining competitor to include companies only tangentially in the same market increases the risk the clause will be void.

How should employers draft non-competes to avoid the Janitor Rule problem?

• Limit the restriction to:
  • Certain specific competitors or a defined competitive set.
  • Roles that are similar to the employee's former role or that would directly exploit the same confidential information or customer relationships.
  • Geographic areas where the employee actually worked or had substantial responsibility.
• Define prohibited activities in functional terms, for example:
  • "Engaging in sales or business development in [defined market]" rather than "working in any capacity for any competitor."
• Use narrower non-solicitation or confidentiality clauses wherever a non-compete would sweep in unrelated work.

When are non-compete agreements most likely to be enforced in New York?

New York courts are most likely to enforce non-competes that apply to highly compensated or senior employees who have meaningful access to trade secrets, strategic plans, or key customer relationships. Restrictions that are short in duration, limited in geography and scope, and tailored to real competitive risk have the best chance of being upheld.

Typical scenarios where New York courts are more receptive

• Executives and C-suite leaders:
  • CEO, CFO, COO, CTO, business unit heads, and similar roles often have broad access to strategy and trade secrets.
  • Courts are more comfortable enforcing 6-12 month non-competes for such roles, sometimes longer in sale-of-business contexts.
• Key revenue generators with specialized knowledge:
  • Senior sales executives with deep customer relationships, portfolio managers, senior product managers in niche industries.
  • Non-competes or non-solicitation clauses may be enforced to protect specific customer goodwill the employer paid to develop.
• Sale of business transactions:
  • Sellers who receive significant consideration for a business can be bound by non-competes for several years and broader territories.
  • Courts see this as part of the purchase price, not a typical employment restraint.

Factors courts weigh in deciding enforceability

• Employee's compensation and bargaining power:
  • Highly compensated employees are assumed to have more negotiating power and understanding of restrictions.
  • Using the same boilerplate for low-wage staff signals overreach and bad policy design.
• Duration:
  • 6-12 months is often the practical maximum for employment non-competes in New York outside of a business sale.
  • Shorter periods (3-6 months) are more defensible for many roles.
• Geographic and industry scope:
  • Narrow regions tied to the employee's actual territory are safer than nationwide bans.
  • Restrictions should focus on direct competitors in the same line of business, not adjacent or unrelated sectors.
• Legitimate interests, not just competition fear:
  • Courts will not enforce restraints simply to prevent competition or "keep talent off the market."
  • You must tie the restriction to specific secrets, goodwill, or training expenditures that need protection.

Are garden leave and non-solicitation clauses safer alternatives to non-competes?

Yes. In New York and across the U.S., carefully drafted garden leave provisions and non-solicitation clauses are generally safer, more defensible alternatives to broad post-employment non-competes, especially for non-executive roles.

What is garden leave and how does it work?

Garden leave keeps the employee on the payroll, and technically employed, during a notice period while they do not perform active duties for the business.

• Typical structure:
  • Employee agrees to provide advance notice of resignation (for example, 60-90 days).
  • Employer can place the employee on paid "garden leave" during all or part of that period.
  • The employee remains an employee, owes fiduciary and confidentiality duties, and usually cannot start at a competitor until the period ends.
• Why courts like it more than unpaid non-competes:
  • The employee is being paid during the restricted period.
  • The restriction is tied to the contract of employment itself, not an after-the-fact restraint.

What are non-solicitation and non-dealing clauses?

• Customer non-solicit: Bars the employee from soliciting or doing business with specific customers or prospects they dealt with in the last 12-24 months.
• Employee non-solicit: Bars the employee from actively recruiting current employees for a competitor for a limited period.
• Non-dealing clauses: Prohibit doing business with certain customers even if the customer initiates contact, but must be very narrowly tailored.

Courts generally view these as less restrictive than full non-competes because they allow the employee to work for a competitor, but limit how they can exploit certain relationships for a defined time.

How do these alternatives compare in risk and usefulness?

How can employers protect trade secrets without relying on restrictive covenants?

Employers in New York and across the U.S. can robustly protect trade secrets without broad non-competes by combining strong confidentiality agreements, access controls, training, and the federal Defend Trade Secrets Act (DTSA). This strategy both reduces legal risk and aligns with the direction of regulators and courts.

Use the Defend Trade Secrets Act and state trade secret law

• DTSA (18 U.S.C. 1836 et seq.):
  • Provides a federal civil cause of action for trade secret misappropriation.
  • Allows federal court access, emergency relief (TROs), and potential damages and attorneys' fees.
  • Requires that you take "reasonable measures" to keep information secret and that the information has economic value from not being generally known.
• New York trade secret law:
  • New York follows common law trade secret principles similar to the Restatement of Torts.
  • Remedies can include injunctions, damages, and in some cases punitive damages.

Implement contract-based protections

• Tailored NDAs and confidentiality clauses:
  • Use clear, role-specific confidentiality provisions in offer letters and standalone NDAs.
  • Expressly identify categories of trade secrets and confidential information.
  • Include return or destruction obligations for information at termination.
• Invention assignment agreements:
  • Assign IP created within the scope of employment to the company, subject to any state law employee invention carve-outs.
  • Clarify treatment of pre-existing inventions and personal projects.

Strengthen operational and technical safeguards

• Access control:
  • Limit access to trade secrets to employees who genuinely need it.
  • Use role-based access, logging, and monitoring of downloads and transfers.
• Data handling policies:
  • Prohibit use of personal email, USB drives, and unapproved cloud services for company data.
  • Implement clear offboarding protocols to cut access immediately upon notice of departure.
• Training and culture:
  • Train employees regularly on what constitutes a trade secret and how to handle it.
  • Obtain acknowledgments that employees understand and will follow policies.

Respond quickly to suspected misuse

1. Preserve evidence:
   • Secure system logs, emails, and device images.
   • Identify any unusual downloads, transfers, or printing just before departure.
2. Send targeted demand letters:
   • Direct the former employee and new employer to preserve evidence and cease use of any company information.
   • Attach or reference confidentiality and IP agreements the employee signed.
3. Seek court relief if needed:
   • File for a temporary restraining order or preliminary injunction in state or federal court under DTSA and state law.
   • Ask the court to order return or forensic deletion of confidential information.

What practical steps should a New York employer take before using a non-compete?

Before using a non-compete in New York, an employer should segment roles by risk, reserve non-competes for a small group of highly compensated, high-risk employees, and prioritize narrower tools like non-solicitation and confidentiality for everyone else. They should also align agreement terms with current New York case law and anticipate potential statutory changes.

Step 1: Map roles to risk levels

1. Identify high-risk roles:
   • Executives, senior sales, product leads, R&D, and strategy roles with broad access to sensitive information.
2. Identify medium-risk roles:
   • Customer-facing staff, mid-level managers with some confidential data access.
3. Identify low-risk roles:
   • Operational, non-strategic roles without meaningful access to trade secrets or customer goodwill.

Step 2: Choose the right restraint for each tier

• High-risk / highly compensated employees:
  • Consider a short non-compete (3-12 months) combined with non-solicitation, confidentiality, and garden leave.
  • Provide meaningful consideration, especially for mid-employment changes, such as bonuses or equity.
• Medium-risk employees:
  • Rely primarily on strong confidentiality and customer / employee non-solicitation clauses.
  • Use non-competes only in exceptional, well-justified situations.
• Low-risk employees:
  • Avoid non-competes entirely.
  • Use confidentiality agreements to protect whatever limited sensitive information they may access.

Step 3: Update templates and processes

• Eliminate "any capacity for any competitor" language and other Janitor Rule triggers.
• Ensure New York choice-of-law and forum clauses are realistic; courts may disregard out-of-state choice-of-law provisions that evade New York public policy.
• Implement a process for legal review before enforcing or sending demand letters, since bad enforcement attempts can draw counterclaims.

What are the typical costs and timelines of enforcing or litigating non-compete agreements?

Enforcing or litigating non-compete and related restrictive covenants in New York is often fast in the early stages but can become expensive if the dispute continues. Employers should budget for a front-loaded push for injunctive relief and then a strategic decision on whether to pursue full litigation or settle.

Typical cost and timing ranges (in U.S. dollars)

These ranges vary widely based on the stakes, number of parties, e-discovery volume, and whether the case is in state or federal court. Many employers use early injunctive relief as a leverage point, then negotiate a resolution that narrows restrictions or establishes ground rules with the new employer.

Commercial considerations before litigating

• Assess the business impact of the departure versus the cost and distraction of litigation.
• Weigh the reputational and employee-relations impact of aggressive enforcement, especially where public sentiment and regulators are skeptical of non-competes.
• Consider whether targeted trade secret or non-solicitation enforcement can achieve your core objectives with less risk than a full non-compete fight.

When should a business hire a lawyer or expert on employment restrictive covenants?

A business should involve employment counsel or a restrictive covenant expert when designing its non-compete and non-solicitation strategy, drafting templates for New York or multi-state use, or before taking enforcement action against a departing employee. Early legal input usually costs less than fixing overbroad agreements or defending against counterclaims later.

Key situations where legal help is especially valuable

• Multi-state workforce:
  • Employees working in California, Colorado, Washington, or other restrictive states cannot be treated the same as New York-based staff.
  • Counsel can design jurisdiction-specific templates or a modular agreement that adjusts by location.
• Reworking existing templates:
  • If your company still uses a broad "no competitor in any capacity" clause, you should have it re-drafted.
  • Counsel can align language with current New York case law and anticipated legislative trends.
• High-stakes departures:
  • When a senior executive or key salesperson resigns to join a direct competitor.
  • Lawyers can quickly assess which contract provisions are likely enforceable and craft a response strategy.
• Potential litigation:
  • Before sending aggressive demand letters or suing, legal review is critical to avoid overreach.
  • Counsel can help evaluate evidence of trade secret misuse and the likelihood of getting an injunction.

What should you bring to that first legal consultation?

• Copies of all relevant agreements: offer letters, non-competes, NDAs, bonus and equity plans, and any later amendments.
• A clear description of the employee's role, compensation, and access to confidential information.
• Evidence, if any, of suspicious activity before departure, such as unusual downloads or client outreach.
• Your business priorities: whether you want to stop the move entirely, limit client contact, or primarily send a deterrent signal.

What are the next steps for employers reviewing their non-compete and trade secret strategy?

Employers should treat non-compete policy as a strategic risk management project: audit current agreements, narrow or remove restrictions for lower-risk employees, reinforce trade secret protections, and prepare for possible legislative change in New York and nationally. The goal is a lean, defensible system that you are actually willing to enforce.

1. Conduct an agreement audit:
   • Inventory all current non-compete, non-solicit, and confidentiality templates in use across your U.S. operations.
   • Identify provisions that are obviously overbroad under the Janitor Rule or other New York standards.
2. Segment and redesign:
   • Define clear criteria for which roles may be subject to non-competes, focusing on highly compensated and high-risk positions.
   • For everyone else, rely on non-solicitation and confidentiality clauses plus operational safeguards.
3. Strengthen trade secret infrastructure:
   • Update NDAs, IP assignment agreements, and exit procedures.
   • Implement or refine access controls, monitoring, and employee training.
4. Prepare enforcement playbooks:
   • Create internal protocols for handling resignations to competitors, including IT steps and communication templates.
   • Identify outside counsel or internal legal contacts to engage quickly when high-risk departures occur.
5. Monitor legal developments:
   • Assign responsibility to HR, legal, or compliance to track New York legislation (including any successor to S4641A) and FTC actions.
   • Schedule annual reviews of restrictive covenant strategy to adjust to new laws and cases.

A disciplined, role-specific approach will let you protect your most valuable relationships and information while staying ahead of courts and lawmakers who are moving away from broad, across-the-board non-competes.