Non-compete agreements in New York are enforceable today, but they may not be for much longer, at least not for most employees. The New York State Senate passed a bill in June 2026 that would ban non-competes for the vast majority of workers in the state. The bill is pending in the Assembly. No ban is law yet, but employers who are still using outdated, overreaching non-compete language are already losing in court under existing common law, and those who are not preparing for legislative change are behind.

Here is where New York non-compete law stands in 2026, what is changing, and what employers should be doing now.

The Current Standard: BDO Seidman and the Reasonableness Test

New York has no statute governing non-compete agreements between employers and employees. Enforceability is determined entirely by common law, under the reasonableness test the Court of Appeals articulated in BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (1999), building on Reed, Roberts Associates v. Strauman, 40 N.Y.2d 303 (1976).

Under that standard, a non-compete is enforceable only if it satisfies all of the following: it is no greater than required to protect a legitimate interest of the employer; it does not impose undue hardship on the employee; it is not injurious to the public; and it is reasonably limited in duration and geographic scope.

The most important threshold question is whether the employer has a legitimate interest worth protecting in the first place. New York courts have defined that category narrowly. Cognizable legitimate interests are limited to protection of genuine trade secrets, protection of confidential customer information, and protection against competition by an employee whose services are truly unique or extraordinary. A general interest in preventing competition is not enough. An employer who cannot identify a specific protectable interest does not have an enforceable non-compete regardless of how the agreement is drafted.

BDO Seidman also established an important limitation in the professional services context. An employer has a legitimate interest in client relationships it developed at its own expense, but not in clients the departing employee brought to the firm personally. That distinction frequently determines how much of a non-compete, if any, New York courts will enforce.

Blue Penciling in New York: The Risk of Overreaching

New York courts can blue-pencil an overbroad non-compete, meaning they can reform it rather than void it entirely, but they do so narrowly and they do not rewrite agreements from scratch. A covenant that is overreaching or was imposed in bad faith will be voided in full. An employer who drafts an unreasonably broad restriction is not protected by the assumption that courts will simply trim it down. In many cases the opposite happens. Employers who routinely use standard-form non-competes with long durations, nationwide geographic scope, or without a specific legitimate interest articulated are taking on real litigation exposure, not just a theoretical risk.

The Legislative Push: Three Years of Near-Misses

The current reasonableness standard may be replaced by statute in the near term. Here is the timeline of how we got to where things stand today.

In June 2023, the New York legislature passed S3100, which would have banned non-competes for virtually all employees regardless of salary, applied retroactively, and voided existing agreements. Governor Hochul vetoed the bill in December 2023, citing the lack of a salary threshold and the retroactive application as her primary concerns.

In February 2025, Senator Sean Ryan introduced a revised bill, S4641, designed to address Hochul’s objections. The revised bill banned non-competes for workers earning less than $500,000 per year and applied only prospectively to agreements signed after the effective date. The Senate passed S4641 in June 2025 by a 40 to 22 vote. The bill stalled in the Assembly Labor Committee without advancing to a floor vote.

In April 2026, Senator Michael Gianaris re-introduced a substantively identical bill, S9759. The Senate passed S9759 on June 3, 2026 by a 40 to 21 vote. As of the date of this article, the companion Assembly bill, A10023, remains in the Assembly Labor Committee and has not been voted on. Governor Hochul has not publicly stated her position on S9759.

No ban is law as of today. The existing common law reasonableness standard remains in effect.

What the Pending Bill Would Do

If S9759 passes the Assembly and is signed by the Governor, here is what it would mean for New York employers:

Non-compete agreements would be banned for all workers earning less than $500,000 per year in total compensation. That threshold is calculated using a three-year average of W-2 and K-1 income and is indexed to the Consumer Price Index going forward. Any non-compete signed after the effective date with a covered employee would be null and void.

Employers would still be permitted to use non-competes for workers earning $500,000 or more annually, but even for those employees the restriction could not exceed one year and the employer would be required to pay the employee’s full salary during the restriction period. That paid garden leave requirement is a significant cost that employers at the high end will need to factor into any restrictive covenant strategy.

Health-related professionals, including physicians, dentists, nurses, physical therapists, psychologists, and pharmacists, among others, would be excluded from the high-earner exemption entirely. Non-competes for health-related professionals would be banned regardless of compensation.

The ban would not affect non-disclosure agreements, trade secret protections, or client non-solicitation agreements, provided those agreements do not otherwise restrict competition. That proviso is where the real litigation risk lives if the bill passes. Employers who redraft non-competes as aggressive non-solicitation agreements that function as de facto competition restrictions will face challenges, and courts will have to draw that line.

Violations would carry a private right of action with a two-year statute of limitations running from the later of when the prohibited agreement was signed, when the employee learned of it, when the employment relationship ended, or when the employer took steps to enforce it. Available remedies include voiding the agreement, liquidated damages up to $10,000, lost compensation, compensatory damages, and attorneys fees.

The bill is prospective only. It would not affect agreements signed before the effective date.

What Employers Should Be Doing Now

The bill has passed the Senate twice. Even if it stalls again in the Assembly this session, the direction of travel in New York is clear. Employers who wait for a final law to act will be behind.

Audit your existing non-compete agreements. Identify which employees are subject to non-competes, what those agreements actually say, and whether they would satisfy the current BDO Seidman reasonableness standard if litigated today. Many non-competes in use by New York employers would not survive a challenge under existing law, let alone under the proposed statute.

Identify who actually needs a non-compete. The $500,000 threshold in the pending legislation is the legislature’s judgment about which employees can meaningfully negotiate the terms of their employment. For most employees below that threshold, a well-drafted confidentiality agreement and a narrowly tailored non-solicitation agreement protecting specific client relationships will provide more protection than an overbroad non-compete that a court will strike entirely.

Review your non-solicitation and confidentiality agreements. If the ban passes, non-solicitation agreements and trade secret protections are the primary tools available for most employees. Those agreements need to be drafted tightly and specifically, not as non-competes in disguise. The pending bill’s proviso excluding agreements that “otherwise restrict competition” is going to be litigated, and employers with overreaching non-solicits will not benefit from the exemption.

Get specific about legitimate interests. Any non-compete you use with employees who would remain covered under the proposed law, those earning $500,000 or more, should identify the specific interest being protected. Courts enforcing the current reasonableness standard already require this. A non-compete that cannot articulate a legitimate interest is not enforceable now and will not be after any new law takes effect.

Plan for the garden leave requirement. If the bill passes, a one-year non-compete for a high-earning employee requires paying that employee’s full salary for the duration of the restriction. That is a real cost that needs to be built into how you structure these agreements going forward.

The Bottom Line

Non-compete agreements are still enforceable in New York in 2026 under the BDO Seidman reasonableness standard. No ban is law today. But the Senate has now passed a ban twice, and the legislative history suggests that some form of restriction is coming within the next one to two legislative sessions. Employers who are using template non-competes without thinking carefully about whether they satisfy the current reasonableness standard are already at risk. Those who are not preparing for a world where non-competes are unavailable for most employees will be scrambling when that world arrives.

The right time to review your restrictive covenant strategy is before litigation or legislation forces the issue.

If you have questions about whether your existing employment agreements are enforceable under New York law, or how to structure your restrictive covenant program in light of pending legislation, contact Parandian Law to schedule a consultation.

Click the link below to schedule a consultation or feel contact us at (914) 793-2626. Our office is located at 245 Main Street, Suite 610, White Plains, NY 10601.

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