Two New York state senators have introduced a bill that would bar employers from requiring noncompete agreements from licensed healthcare professionals.
Sens. Michelle Hinchey and Patricia Fahy introduced the Senate bill Oct. 16, and it has been referred to the Senate Rules Committee. Unlike earlier statewide efforts, the bill applies only to healthcare. It would cover workers licensed as physicians, physician assistants, nurses, dentists, pharmacists, physical and occupational therapists, psychologists, mental health practitioners and several other professions. Any noncompete sought or accepted after the law takes effect would be void.
Workers could sue employers that violate the law. Courts would be required to award liquidated damages of up to $10,000 per affected worker, and could also award lost compensation, damages and attorneys’ fees.
The bill’s only exception is for the sale of a business or a majority ownership stake by someone holding at least 15% of the business. Even those covenants would be capped at one year and would require salary payments during the restricted period. According to an Oct. 26 analysis from law firm Holland & Knight, that would be a significant change for healthcare deals, which often carry longer restrictions.
The ban would not be retroactive. It would apply to contracts entered into or modified 30 days or more after enactment. Because the bill does not define “modified,” routine renewals could bring existing agreements under the law, Holland & Knight noted. Confidentiality, trade secret and client nonsolicitation agreements would still be allowed.
In the bill’s sponsor memo, Ms. Hinchey cited estimates from the Hopkins Business of Health Initiative that up to 45% of healthcare workers are subject to noncompetes, compared with 20% of the overall workforce. The memo also pointed to the legal fight between Ellis Medicine and St. Peter’s Health Partners over noncompetes covering 27 Capital Region cardiologists. It said 18 states have banned noncompetes in healthcare as of this fall.
Gov. Kathy Hochul vetoed a broader noncompete ban in 2023. The new bill’s narrower scope and sale-of-business exception may be aimed to address her concerns.
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