New York’s 2025 Non-Compete Restrictions Create Unprecedented Employment Dispute Crisis for Long Island Businesses
The employment landscape across Long Island is undergoing a seismic shift as New York’s Senate passed Senate Bill S4641 in June 2025, which would prohibit most non-compete agreements. This proposed legislation, now awaiting action by the Assembly, represents the most significant change to employment law in decades and is already creating waves of uncertainty for businesses and employees throughout Nassau and Suffolk counties.
The Legislative Landscape: What’s Changed
Governor Kathy Hochul vetoed a previous bill in December 2023 that would have banned all non-compete agreements, claiming the outright ban would be overly restrictive of businesses with legitimate interests in retaining “highly-compensated talent”. Senate Bill S4641, introduced in February 2025, is lawmakers’ latest attempt to respond to Hochul’s criticisms after she signaled a willingness to sign a more targeted ban.
The current bill creates a two-tiered system that fundamentally changes how non-compete agreements work in New York. Exempted from S4641’s ban are non-compete agreements with “highly compensated individuals,” other than health-related professionals, that are reasonable in time, geography and scope. The bill defines highly compensated individuals as those compensated at an average annualized rate of cash compensation equivalent to or greater than $500,000 per year.
For those high earners who can still be subject to non-competes, any permissible non-compete agreement may not contain a term of restriction greater than one year, and must provide for the payment of salary during the period of enforcement.
Long Island’s Unique Employment Challenge
Long Island’s diverse business ecosystem—from healthcare systems and financial services in Nassau County to technology companies and manufacturing in Suffolk County—makes this legislation particularly complex to navigate. If passed, employers would not be able to enter into noncompete agreements with any workers earning less than the highly compensated threshold or with certain health-related professionals, regardless of their annual income.
The healthcare restriction is particularly significant for Long Island, which hosts major medical centers like Northwell Health and NYU Winthrop. Health-related professionals such as physicians, physician assistants, chiropractors, dentists, perfusionists, veterinarians, physical therapists, pharmacists, nurses, podiatrists, optometrists, psychologists, occupational therapists, speech pathologists/audiologists, and mental health practitioners would be completely exempt from non-compete restrictions regardless of income.
Enforcement Crisis and Legal Complications
The proposed legislation creates significant enforcement challenges that are already manifesting in employment disputes across Long Island. The bill allows for a private right of action for employees to challenge non-competes that violate the law, with employees having a two-year window to bring an action when the employment or contractual relationship is terminated or the employer takes any step to enforce the non-compete agreement.
Courts will have jurisdiction to void any non-compete that violates the law and the employee can be awarded lost compensation, compensatory damages, liquidated damages (capped at $10,000 per individual), and attorneys fees and costs. This creates a significant financial risk for employers who attempt to enforce agreements that may later be deemed invalid.
The jurisdictional reach of the law is particularly broad. No choice of law provision or choice of venue provision that would have the effect of avoiding or limiting the requirements of this section shall be enforceable if the covered individual is and has been, for at least thirty days immediately preceding the covered individual’s cessation of employment, a resident of New York or employed in New York, including individuals who work remotely in another state but who report to a New York worksite or office or who report to a New York-based supervisor.
Business Compliance Challenges
Companies must meet several requirements to comply with New York’s 2025 non-compete ban if it becomes law, including avoiding changes to any existing non-compete agreements, which would subject them to the new law and render them void, removing any non-compete clauses from employment contracts, severance agreements, or other documents, training HR and legal teams on the impacts of the law, and posting a visible notice to employees detailing how the new law impacts them.
The retroactive implications add another layer of complexity. The bill would not apply retroactively, so if passed, existing noncompetes would remain enforceable consistent with New York common law, but would be applicable to contracts entered into or modified on or after the effective date.
Current Legal Landscape and Judicial Trends
Even under current law, New York courts generally disfavor non-competes unless they meet strict criteria. Recent judicial trends show a move toward stricter scrutiny, with courts increasingly siding with employees when restrictions appear excessive or oppressive.
Non-competes are regularly challenged and defeated for overly broad scope, with courts unlikely to enforce broad restrictions that effectively prevent employees from working at all. Employees with no client contact, no access to trade secrets, and no strategic role face challenges to non-competes, and inconsistent enforcement by employers undermines arguments that restrictions are truly necessary.
Strategic Legal Guidance for Long Island Businesses
Given the complexity of this evolving legal landscape, Long Island businesses need experienced legal counsel to navigate these changes effectively. Whether you’re reviewing existing agreements, updating employment contracts, or facing enforcement challenges, working with a skilled commercial litigation attorney Long Island becomes essential for protecting your business interests while ensuring compliance with new regulations.
The Frank Law Firm P.C., located in Old Brookville and serving businesses throughout Long Island, brings deep understanding of both the local business landscape and the complexities of New York employment law. With extensive experience in commercial litigation and business disputes, the firm is well-positioned to help Long Island companies adapt to these significant legal changes.
Looking Ahead: Preparing for Change
There is clearly political will in Albany to curb the use of non-compete agreements, and employers should stay informed about the status of this bill and review the restrictive covenants they have in place. As legislative efforts to limit or ban non-competes gain momentum, the trend suggests a future where New York non-compete agreements may face even stricter limitations especially for lower-wage workers.
The enforcement crisis created by New York’s 2025 restrictions isn’t just about compliance—it’s about fundamentally rethinking how Long Island businesses protect their competitive interests while respecting employee mobility rights. As this legislation moves through the Assembly, businesses must act now to review their agreements, train their teams, and develop strategies that protect their interests within the new legal framework.
For Long Island businesses facing these unprecedented challenges, the time for preparation is now. The intersection of complex new legislation, evolving judicial attitudes, and increased employee awareness creates a perfect storm that requires experienced legal guidance to navigate successfully.