Senate Bill S562

                                
 
BILL NUMBER: S562

SPONSOR: HOYLMAN
 
TITLE OF BILL:

An act to amend the general obligations law, in relation to prohibiting
agreements between employers that directly restrict the current or
future employment of any employee

 
PURPOSE OF BILL:

This bill would prohibit "no-poaching" agreements between certain
employers.

 
SUMMARY OF PROVISIONS OF BILL:

Section 1 of the bill created a short title of the bill, to be known as
the "End Employer Collusion Act".

Section 2 of the bill amends the general obligations law by adding a new
section 5-338 that would prohibit restrictive employment agreements
              

between a current and future employer. Restrictive employment agreement
is defined in this section as any agreement that is included in a fran-
chise agreement and prohibits or restricts one or more franchisees from
soliciting or hiring another franchisee's or the franchisor's employees
or former employees.

This section also provides that any person who was denied an employment
due to ,a restrictive employment agreement or was otherwise damaged due
to a violation of this section may sue for and recover a judgment equal
to the sum of (i) any actual damages sustained by the individual as a
result of such violation, (ii) such amount of punitive damages as the
court may allow, and (iii) in the case of any successful action to
enforce any liability under this section, the costs of the action
together with reasonable attorney's fees as determined by the court.

In addition to the private right of action, the bill allows the Attorney
General to enforce the law pursuant to his or her powers under Executive
Law Section 63(12).

Section 3 sets the effective date.

 
JUSTIFICATION:

"No-poaching" agreements are the newest waive of restrictive employment
agreements being used by employers to limit the mobility and freedom of
their employees. Agreements not to poach or compete for workers among
unaffiliated businesses are typically a violation of antitrust laws that
were enacted to prevent employers from colluding to keep wages low. Yet,
corporate franchises often claim that a franchisor and its franchisees
should be held to a different standard, and the share of franchisors
that included no-poaching clauses in their contracts grew from one-third
to more than one-half-58 percent-of all franchisors between 1996 and
2016.* by the Center for American,Progress, some Attorneys General are
taking action under their authority provided by existing antitrust laws
upon learning of fast food corporations requiring franchisees to sign no
poaching agreements. This legislation would provide further clarity than
no-poaching agreements are banned in any form.

Much like non-compete agreements, the entire purpose of these types of
arrangements is to hinder the movement of employees. This type of
arrangement removes the ability of employers to seek out employees they
deem desirable, and can drive down workers' wages by barring companies
from recruiting skilled employees. This is not in line with the spirits
of free market and enterprise so many of these same corporations tout
when attempting to shut down government regulations that would dictate
their business practices. The "End Employer Collusion Act" would ban
these restrictive employment agreements and empower employees to seek
redress if they are damaged in any way by such an agreement.

 
LEGISLATIVE HISTORY:

S.3937-C of 2019-2020 (Hoylman): Advanced to Third Reading Calendar
A.5776-C of 2019-2020 (Dinowitz): Advanced to Third Reading Calendar

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None to the State.

 
EFFECTIVE DATE:
Immediate.
*Alan B. Krueger and Orley Ashenfelter, "Theory and Evidence on Employer
Collusion in the Franchise Sector." Discussion Paper 11672 (IZA Insti-
tute of Labor Economics, 2018), available at
http://ftp.iza.org/dp11672.pdf 2
**https://www.americanprogress.org/issues/economy/reports/2019/0 I
/09/464831/the-freedom-to-leave/