Trade Secrets & Employee Mobility

Earlier this year, legislation was proposed in New York that would effectively ban all post-employment noncompetes. Few paid close attention to the proposals, ostensibly because similar legislation is proposed virtually every year in states across the country, including in New York, and typically nothing comes of it (Minnesota being the major exception, having recently passed a noncompete ban that goes into effect July 1, 2023).

New York State may soon join the growing list of jurisdictions restricting or banning noncompete agreements. On June 7, 2023 the New York State Senate passed S 3100A (the “Bill”), which would prohibit employers from seeking, requiring, demanding, or accepting certain noncompete agreements.

Last week, the New York State Senate advanced two bills seeking to ban both “no-poach” clauses in franchise agreements and “no-rehire” clauses, which are commonly used in settlement agreements.

The first of these bills, known as the End Employer Collusion Act (Bill S562), prohibits no-poach agreements between franchisors and franchisees.  Such agreements restrict franchisees from soliciting or hiring current or former employees of the franchisor or other franchisees.  The End Employer Collusion Act would also provide a private right of action for any person denied ...

New York is known for having many protections for its employees in the workplace, but a long-standing legal doctrine can furnish a remedy to employers with regard to employees who engage in repeated acts of disloyalty during their employment. The “faithless servant doctrine” permits an employer to “claw back” an employee’s compensation when an employee is found to be disloyal to the employer. While the doctrine may seem antiquated, it continues to have vitality.  For example, in March 2018, a New York appellate court confirmed an arbitration award that directed, based on ...