S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  7864--A
                                                            R. R. 174
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               May 17, 2017
                                ___________
 
 Introduced  by  M.  of  A.  DINOWITZ, TITUS, STECK -- (at request of the
   Department of Law) -- read once and referred to the Committee on Labor
   -- reported and referred to the Committee on  Codes  --  reported  and
   referred  to the Committee on Rules -- amended on the special order of
   third reading, ordered reprinted as amended, retaining  its  place  on
   the special order of third reading
 
 AN  ACT  to  amend the labor law, in relation to prohibiting non-compete
   agreements and certain restrictive covenants
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  The labor law is amended by adding a new section 191-d to
 read as follows:
   § 191-D. NON-COMPETE AGREEMENTS. 1. FOR THE PURPOSES OF THIS  SECTION,
 THE TERM:
   A.  "NON-COMPETE AGREEMENT" MEANS AN AGREEMENT, OR CLAUSE CONTAINED IN
 AN EMPLOYMENT CONTRACT, BETWEEN AN EMPLOYER AND AN EMPLOYEE THAT PROHIB-
 ITS OR RESTRICTS SUCH EMPLOYEE  FROM  OBTAINING  EMPLOYMENT,  AFTER  THE
 CONCLUSION  OF  EMPLOYMENT  WITH THE EMPLOYER INCLUDED AS A PARTY TO THE
 AGREEMENT:
   (I) FOR A SPECIFIED PERIOD OF TIME;
   (II) IN ANY SPECIFIED GEOGRAPHICAL AREA; AND/OR
   (III) WITH ANY PARTICULAR OTHER EMPLOYER OR IN ANY  PARTICULAR  INDUS-
 TRY.
   B.  "COVERED EMPLOYEE" MEANS ANY EMPLOYEE WHOSE EARNINGS ARE LESS THAN
 SEVENTY-FIVE THOUSAND DOLLARS ANNUALLY. THIS THRESHOLD SHALL BE ANNUALLY
 INCREASED, WHERE WARRANTED BY APPLICATION OF THE BELOW-DESCRIBED  FORMU-
 LA,  PURSUANT  TO  A  PERCENTAGE  TO  BE  DETERMINED BY REFERENCE TO THE
 CONSUMER PRICE INDEX, PUBLISHED BY THE UNITED  STATES  BUREAU  OF  LABOR
 STATISTICS,  FOR  THE  APPLICABLE  CALENDAR  YEAR. SAID PERCENTAGE SHALL
 EQUAL FIFTY PERCENT OF THE ANNUAL  INFLATION,  AS  DETERMINED  FROM  THE
 INCREASE  IN  THE  CONSUMER PRICE INDEX IN THE ONE-YEAR PERIOD ENDING ON
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                       [ ] is old law to be omitted.
                                                            LBD09251-09-7

 A. 7864--A                          2
 
 MARCH THIRTY-FIRST PRIOR TO THE COST-OF-LIVING ADJUSTMENT  EFFECTIVE  ON
 THE ENSUING SEPTEMBER FIRST. SAID PERCENTAGE SHALL THEN BE ROUNDED UP TO
 THE  NEXT  HIGHER  ONE-TENTH  OF  ONE PERCENT AND SHALL NOT EXCEED THREE
 PERCENT.  IF THE PERCENTAGE INCREASE WOULD BE LESS THAN ONE PERCENT, THE
 THRESHOLD SHALL NOT INCREASE.
   2. NO EMPLOYER OR ITS AGENT, OR THE OFFICER OR  AGENT  OF  ANY  CORPO-
 RATION,  PARTNERSHIP, OR LIMITED LIABILITY COMPANY, SHALL SEEK, REQUIRE,
 DEMAND OR ACCEPT A NON-COMPETE AGREEMENT FROM A COVERED EMPLOYEE.
   3. FOR ALL EMPLOYEES OTHER THAN COVERED EMPLOYEES, NO EMPLOYER OR  HIS
 OR  HER  AGENT, OR THE OFFICER OR AGENT OF ANY CORPORATION, PARTNERSHIP,
 OR LIMITED LIABILITY COMPANY, SHALL SEEK, REQUIRE, DEMAND  OR  ACCEPT  A
 NON-COMPETE AGREEMENT FROM ANY EMPLOYEE UNLESS THE NON-COMPETE AGREEMENT
 MEETS THE FOLLOWING REQUIREMENTS:
   A. IT SHALL BE IN WRITING AND SIGNED BY THE EMPLOYER AND EMPLOYEE.
   B.  IT SHALL BE PROVIDED TO A PROSPECTIVE EMPLOYEE BY THE EARLIER OF A
 FORMAL OFFER OF EMPLOYMENT OR THIRTY DAYS BEFORE THE NON-COMPETE  AGREE-
 MENT GOES INTO EFFECT.
   C.  IF  A  CURRENT EMPLOYEE IS NOT SUBJECT TO A NON-COMPETE AGREEMENT,
 ANY NEW NON-COMPETE AGREEMENT MUST BE  PROVIDED  AT  LEAST  THIRTY  DAYS
 BEFORE THE AGREEMENT BECOMES EFFECTIVE.
   4.  IF  AN  EMPLOYEE  SUBJECT TO A NON-COMPETE AGREEMENT IS DISCHARGED
 WITHOUT CAUSE, THE NON-COMPETE AGREEMENT IS NO LONGER ENFORCEABLE AS  TO
 THAT EMPLOYEE.
   5.  A.  AN  EMPLOYEE,  INCLUDING A COVERED EMPLOYEE, MAY BRING A CIVIL
 ACTION IN A COURT OF COMPETENT  JURISDICTION  AGAINST  ANY  EMPLOYER  OR
 PERSONS  ALLEGED  TO HAVE VIOLATED THIS SECTION. AN EMPLOYEE SHALL BRING
 SUCH ACTION WITHIN TWO YEARS OF THE LATER OF: (I)  WHEN  THE  PROHIBITED
 NON-COMPETE  AGREEMENT  WAS SIGNED; (II) WHEN THE EMPLOYEE LEARNS OF THE
 PROHIBITED NON-COMPETE AGREEMENT; (III) WHEN THE EMPLOYMENT RELATIONSHIP
 IS TERMINATED; OR (IV) WHEN THE EMPLOYER TAKES ANY STEP TO  ENFORCE  THE
 NON-COMPETE  AGREEMENT.  THE  COURT  SHALL HAVE JURISDICTION TO VOID ANY
 SUCH NON-COMPETE AGREEMENT AND TO ORDER ALL APPROPRIATE RELIEF,  INCLUD-
 ING ENJOINING THE CONDUCT OF ANY PERSON OR EMPLOYER; ORDERING PAYMENT OF
 LIQUIDATED  DAMAGES; AND AWARDING LOST COMPENSATION, DAMAGES, REASONABLE
 ATTORNEYS' FEES AND COSTS.
   B. FOR THE PURPOSES OF THIS SUBDIVISION, LIQUIDATED DAMAGES  SHALL  BE
 CALCULATED  AS  AN  AMOUNT NOT MORE THAN TEN THOUSAND DOLLARS. THE COURT
 SHALL AWARD LIQUIDATED DAMAGES TO EVERY  EMPLOYEE  AFFECTED  UNDER  THIS
 SECTION, IN ADDITION TO ANY OTHER REMEDIES PERMITTED BY THIS SECTION.
   C.  THE COURT SHALL ALSO AWARD A CONSIDERATION PAYMENT IF THE EMPLOYER
 DID NOT PROVIDE SUCH PAYMENT WHEN DUE.
   6.   THE PROVISIONS OF THIS  SECTION  SHALL  NOT  APPLY  TO  EMPLOYEES
 COVERED UNDER SECTION TWO HUNDRED TWO-K OF THIS CHAPTER.
   § 2. Severability clause. If any clause, sentence, paragraph, subdivi-
 sion,  section  or  part  of  this act shall be adjudged by any court of
 competent jurisdiction to be invalid, such judgment  shall  not  affect,
 impair,  or  invalidate  the remainder thereof, but shall be confined in
 its operation to the clause, sentence, paragraph,  subdivision,  section
 or part thereof directly involved in the controversy in which such judg-
 ment shall have been rendered. It is hereby declared to be the intent of
 the  legislature  that  this  act  would  have been enacted even if such
 invalid provisions had not been included herein.
   § 3. This act shall take effect on the one hundred eightieth day after
 it shall have become a law.