New York non-compete law

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Short answer: New York applies a common-law reasonableness standard to non-competes: enforceable only if reasonable in duration, geography, and scope, supported by a legitimate business interest, and not unduly harsh on the employee. A 2023 statewide ban (Bill A1278B) passed the legislature but was vetoed by Governor Hochul in December 2023. As of 2026, common-law standards with strong judicial skepticism continue to apply.

The reasonableness test

New York applies a common-law reasonableness test that asks whether a non-compete is:

No greater than required for the protection of the legitimate interest of the employer
Not imposing undue hardship on the employee
Not injurious to the public

This three-part test is more searching than the reasonableness tests in many other states. New York courts have repeatedly cited the state's strong public policy disfavoring restraints on competition.

Practical implications:

Durations longer than 12 months are heavily scrutinized
Geographic scope must align with the employer's actual market presence and the employee's actual territory
Activity scope must be limited to direct competitive activity, not employment in the industry at large
The employee's hardship is weighed: a non-compete that prevents an employee from earning a living is typically void
Restrictions on lower-wage workers face especially strict review

Legitimate business interests recognized in New York

New York courts recognize four categories of legitimate business interest that can support a non-compete:

Protection of trade secrets
Protection of confidential customer information
Protection against the employee's unique services (rare, applies to highly specialized roles)
Protection of customer goodwill developed at the employer's expense

The "unique services" category is interpreted narrowly. Most professional roles do not qualify. The category typically applies to highly specialized scientific or creative roles where the employee's specific abilities are essential and irreplaceable.

The customer goodwill category is more commonly invoked. It applies when the employer invested in the employee's development and the employee developed customer relationships using employer resources.

The 2023 vetoed legislation

In 2023, the New York legislature passed Bill A1278B, which would have banned most employer-employee non-competes statewide. Governor Hochul vetoed the bill in December 2023, citing concerns about the absence of a salary threshold.

The bill's failure means New York continues to apply common-law standards. However, the legislative push reflects strong policy disfavor for non-competes in the state, which courts have cited in scope-related decisions.

Subsequent legislative sessions may take up similar bills. The current trajectory is toward more restrictive law over time, but the timeline is uncertain.

BDO Seidman and the modern framework

The leading New York case on non-compete reasonableness is BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (1999). The Court of Appeals held that a customer non-solicit was overly broad where it included customers the departing employee had no prior relationship with. The court endorsed limiting customer non-solicits to customers the employee actually serviced.

The case also articulated the modern three-part reasonableness test described above and emphasized that any restriction must be carefully tailored to the specific legitimate interest at stake.

Lower courts apply BDO Seidman regularly. The case is the starting point for any New York non-compete analysis.

Industry-specific limits

Several industries face special rules in New York:

Attorneys: Subject to Rules of Professional Conduct 5.6, which prohibits attorney non-competes
Broadcasters: New York Labor Law § 202-k prohibits non-competes for broadcast industry employees
Financial professionals: Subject to FINRA Protocol for Broker Recruiting where applicable

For ordinary employment outside these specialized categories, the common-law test applies.

What to do next

If you're a New York employee under a non-compete, the analysis turns on the specific scope of the agreement and the specific legitimate interest the employer claims. Overbroad agreements often get blue-penciled to narrower terms or voided entirely.

If you want a delivered analysis of your specific agreement against New York case law, we deliver one in 24 hours for $199. See Non-Compete Review.

Sources

BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (1999)
Reed, Roberts Associates v. Strauman, 40 N.Y.2d 303 (1976)
Bill A1278B (vetoed December 2023)
New York Labor Law § 202-k (broadcasters)
NY Rules of Professional Conduct 5.6 (attorneys)

Get your contract reviewed

If you want a delivered review of your specific document with cited authority and counter language, see https://trycounteroffer.com/non-compete.

Last updated: Sun May 31 2026 00:00:00 GMT+0000 (Coordinated Universal Time)

Counteroffer is a contract analysis service, not a law firm. This page is informational, not legal advice.