Proposed New York Bill Targets Healthcare Non-Competes

New York State Senators Michelle Hinchey and Patricia Fahy introduced Senate Bill S10722 (S10722) on October 16, 2026, which would broadly prohibit post-employment non-compete agreements for licensed healthcare professionals in New York, subject to a single exception for the sale of a business. Unlike prior legislative attempts to ban non-competes, S10722 focuses exclusively on healthcare. If enacted, the law would be enforced through mandatory liquidated damages and a private right of action. Other restrictive covenants remain unaffected, including confidentiality, trade secret and client non-solicitation agreements, as long as they do not otherwise restrict the worker from obtaining employment after separation. Importantly, the prohibition would apply only prospectively: Existing non-competes would not be voided unless they are modified on or after the bill's effective date.

Additional Requirements

S10722 would add a new Section 191-d to the New York Labor Law prohibiting any employer or its agent from seeking, requiring, demanding or accepting a "healthcare non-compete agreement" from a covered healthcare worker. The bill defines a healthcare non-compete agreement as any agreement, or clause in any agreement, between an employer and a covered healthcare worker that prohibits or restricts the worker from obtaining employment after the conclusion of employment with that employer. Any such agreement entered into after the bill's effective date would be null, void and unenforceable.

A "covered healthcare worker" is broadly defined to include individuals licensed under the New York Education Law as physicians, physician assistants, chiropractors, dentists, perfusionists, veterinarians, physical therapists, pharmacists, nurses, podiatrists, optometrists, psychologists, occupational therapists, speech pathologists or audiologists, and mental health practitioners.

S10722 would also create a private right of action allowing covered healthcare workers to sue an employer or other person alleged to have violated the law. A court could void the agreement and award appropriate relief, including injunctive relief, lost compensation, compensatory damages, and reasonable attorneys' fees and costs. The court would also be required to award each affected worker liquidated damages of up to $10,000, in addition to any other remedies. Workers could file suit within two years of the latest of the date:

• the prohibited non-compete was signed
• the worker learns of the non-compete
• the employment or contractual relationship is terminated
• the employer takes any step to enforce the non-compete

The bill's only exception to the non-compete ban would be for covenants entered into in connection with the sale of the goodwill of a business, or the sale of a majority interest in a business, by a person or entity owning at least a 15 percent ownership interest in the business.

Any permissible non-compete would have to satisfy New York state's common law enforceability requirements and must:

• be reasonable in time, geography and scope
• not impose undue hardship on the employee or harm the public
• be necessary to, and no greater than necessary to, protect the employer's legitimate business interests

In addition, the restriction could not exceed one year, and the agreement would have to provide for the payment of salary during the enforcement period. Because the sale-of-business exception is the bill's only express carve-out, these limitations would effectively apply to sale-related covenants – a significant departure for healthcare transactions in which restricted periods often exceed one year – and sellers are compensated through the purchase price rather than ongoing salary.

Employers would not be able to circumvent the law through choice-of-law or forum provisions requiring interpretation or litigation in another state if the affected healthcare worker:

• is employed in New York state
• lives, is employed, or has been living or employed in New York for 30 days immediately preceding cessation of employment, or
• is a remote worker who reports to a New York office or supervisor

Employers would also be required to post a notice, to be developed by the New York State Department of Labor, informing employees of their rights under the law.

Permissible Restrictive Covenants

Though the bill would ban non-competes, it would preserve certain other restrictive covenants to the extent not otherwise prohibited by law. Specifically, employers could continue to use agreements that:

• establish a fixed term of service or exclusivity during employment
• prohibit disclosure of trade secrets
• prohibit disclosure of confidential and proprietary client information
• prohibit solicitation of the employer's clients, provided those agreements do not otherwise restrict the worker from obtaining employment after separation

Notably, the bill is silent on employee non-solicitation covenants, leaving their status unclear.

If enacted, the prohibition would take effect 30 days after the bill becomes law and apply only to contracts entered into or modified on or after that date. The notice provisions would take effect 180 days after enactment. Because the bill does not define "modified," routine amendments and renewals could bring an existing non-compete within the law's scope.

By focusing on healthcare and including a sale-of-business exception absent from the 2023 legislation, the bill's sponsors may be seeking to address concerns that led Governor Kathy Hochul to veto the broader non-compete ban (S3100A/A01278) in late 2023 (discussed in more detail in this Holland & Knight alert).

S10722 is at an early stage of the legislative process, and its prospects remain uncertain. Holland & Knight will continue to monitor the bill's progress and provide updates on any amendments or significant developments.

For more information or questions, please contact the author.