Senate Bill S5790

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5790
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               May 15, 2019
                                ___________
 
 Introduced by Sen. RAMOS -- (at request of the Attorney General) -- read
   twice  and  ordered  printed,  and when printed to be committed to the
   Committee on Labor
 
 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
 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD07440-01-9

 S. 5790                             2
 
 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.