November 28, 2023

The “Freelance Isn’t Free Act” was signed into law by New York Governor Kathy Hochul on November 22. The law, SB 5026, gives freelance workers the right to have written contracts and be paid within 30 days of providing freelance services. The legislation is expected to apply to over two million New York freelancers, who fit the definition of “freelance workers” prescribed in the Act as individuals or organizations of one person who provide services of $800 or more to one hiring party within a 120-day period. The legislation specifically excludes sales representatives, practicing attorneys, licensed medical professionals, and construction contractors from the definition of freelancers. Similar legislation has been in place in New York City since 2017.

The law, which will take effect in May of 2024, will require those who hire a freelancer to provide $800 worth of services or more to use a contract including, among other things, an itemization of all services to be provided by the freelancer, the value of the services to be provided pursuant to the contract, and the rate and method of compensation. Hiring parties who fail to adequately memorialize an arrangement with a freelancer could be subject to fines. The law will protect hiring parties from taking any “action that penalizes a freelance worker for, or is reasonably likely to deter a freelance worker from, exercising or attempting to exercise any right guaranteed under [the law], or from obtaining any future work opportunity because the freelance worker has done so.”

Freelance workers who wish to allege violations of the law may file a complaint with the Commissioner of Labor, who, following an investigation, may sue hiring parties, join claims from different freelancers against the same hiring party, or impose civil and criminal penalties. Individuals may also file civil actions.  The bill further authorizes the State Attorney General to bring a civil action on behalf of the state and seek injunctive relief, civil penalties up to $25,000, and any other appropriate relief where reasonable cause exists to believe that a hiring party is engaged in a pattern or practice of violating the Act.

It is always a best practice for businesses that work with freelancers and independent contractors to employ written contracts. Businesses should not wait until enforcement of SB 5026 begins in May 2024 to codify their arrangements with workers, which is a key step in identifying any potential liability involved in those relationships.

To read how Castaybert PLLC can assist you with employment law matters, click here.

November 27, 2023

On November 17, 2023, New York Governor Kathy Hochul signed into law SB S4516, prohibiting settlement agreements in claims involving sexual harassment, or other form of unlawful discrimination, from containing any condition that requires payment of liquidated damages for violations of a non-disclosure or non-disparagement clause included in such settlement agreement. The law, effective as of Gov. Hochul’s signature, will apply to all settlement agreements between employees and employers entered into on November 17, 2023 or later.

The new law will be relevant to settlement agreements dealing with various issues, including claims of unlawful harassment, discrimination, and retaliation. In effect, such agreements will be prohibited from requiring a defendant found to have breached the agreement to either pay a set amount of money indicated in the agreement, forfeit settlement payments, or make any affirmative statement, assertion, or disclaimer that the complainant was not in fact subject to unlawful harassment, discrimination, or retaliation. No release of a claim involving unlawful discrimination, including discriminatory harassment or retaliation, will be enforceable if it is determined to be in violation of the new law.

While the law applies only to agreements entered into on or after November 17, 2023, Gov. Hochul signed another bill extending the statute of limitations on all unlawful discriminatory practices claims to three years. Prior to the amendment, most complaints of unlawful discrimination were required to be filed with the Division of Human Rights within one year, while a three-year statute of limitations only applied for claims of sexual harassment. The 3-year statute of limitations will be in place as of claims arising on or after February 15, 2024.

The new laws should help fill the void left by the New York’s Adult Survivors Act, which expired on November 24, 2023. The now-expired law gave survivors of sexual assault who were 18 or older at the time of the alleged abuse a one-time opportunity to file civil lawsuits against their abusers, even when the statute of limitations had run out. The new limitations on release of claims and the extension of the time to file complaints of unlawful discrimination are intended to strengthen the rights and protections of New York employees generally.

To read how Castaybert PLLC can assist you with employment law matters, click here.

September 27, 2023

California Governor Gavin Newsom signed SB 699 on September 1, prohibiting employers from entering into or enforcing noncompete agreements, regardless of where the employment agreement was signed and whether the employee worked outside of California.

SB 699, which goes into effect on January 1, 2024, contributes to the state’s history of promoting public policy in favor of employee mobility and competition.

California’s Business and Professions Code Section 16600 has been the cornerstone of this policy, rendering void any contractual provisions restricting individuals from engaging in lawful professions, trades, or businesses, with limited statutory exceptions. SB 699, codified as Section 16600.5 of the Business and Professions Code, broadens Section 16600’s restrictions on post-employment restrictive covenants by applying the ban “regardless of whether the contract was signed and the employment was maintained outside of California.”

The expanded restriction of noncompetes reflects the California legislature’s findings on the detrimental impact of noncompetes on economic growth, wages, diversity, entrepreneurship, and innovation. Despite being unenforceable in California, noncompete clauses continue to be widespread in the U.S., with the threat of noncompete litigation producing a chilling effect on employee mobility.

In response to challenges posed by out-of-state employers attempting to prevent the hiring of former employees by California employers, SB 699 declares that agreements restraining trade under Section 16600 are void and unenforceable, regardless of when and where they were signed and whether employment was maintained outside of California.

The legislation reflects a growing nationwide trend of noncompete bans. Several states have banned noncompetes, including North Dakota, Oklahoma, and Minnesota. As of June 2023, New York is poised to join these states after the state legislature passed a bill prohibiting nearly all noncompete agreements, pending Governor Kathy Hochul’s signature. At the federal level, President Biden’s 2021 Executive Order on Promoting Competition in the American Economy encouraged the Federal Trade Commission to curtail unfair use of noncompete clauses. In response, the FTC in January proposed a comprehensive ban on non-compete clauses in employment contracts, including the elimination of all existing non-competes.

The expansion of Section 16600 provides substantial legal recourse to anyone California employers wish to employ to provide services in California. SB 699 empowers employees, former employees, and prospective employees to enforce their rights through private legal action seeking injunctive relief and actual damages, with successful plaintiffs entitled to recover reasonable attorney fees and costs.

To read how Castaybert PLLC can assist you with employment law matters, click here.

June 22, 2023

On June 7, 2023, the New York State Senate passed Senate Bill 3100A prohibiting most non-compete agreements in employment contracts. Shortly after on June 20, 2023, the bill passed in the New York State Assembly. This Bill has not been officially enacted yet, but if it is signed by Governor Hochul, it will become law and have a significant effect on business practices and employment contracts.

Subsection 1 of the Bill defines a non-compete agreement as “any agreement, or clause contained in any agreement, between an employer and a covered individual that prohibits or restricts such covered individual from obtaining employment, after the conclusion of employment with the employer”. It further declares “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void”.

In essence, this Bill prevents employers from restricting where a terminated employee can get employment after their employment ends. The New York State Senate stated the justifications for this Bill are:

• Non-compete agreements have a negative effect on the labor market and economy of New York State. They prevent workers from seeking employment at entities that may be a better fit, and they provide employers from providing more competitive benefits and wages because their workforce cannot seek employment elsewhere.
• In certain industries, they can have a detrimental impact on consumers.
• Recently, the federal government has announced an interest in banning such agreements nationwide via an FTC regulation, so this bill would codify such a ban in state law.

The scope of S 3100A is solely the restrictions of the non-compete after the conclusion of employment. Any non-compete agreements related to the present duties of an employee or independent contractor currently employed are still valid and enforceable. This bill does not affect non-solicitation agreements or non-disclosure agreements. Further, otherwise valid contracts will be enforced notwithstanding an unenforceable non-compete provision.

These changes will only take effect if Governor Hochul signs the Bill and will not retroactively apply to any previous non-compete agreement agreed upon prior to enactment.

While other states have similarly restricted the scope of non-compete agreements for employment contracts, New York could now become the fifth state to ban nearly all non-compete agreements for employees, following Minnesota, Oklahoma, North Dakota, and California.

To read the S 3100A Bill, click here.

To read how Castaybert PLLC can assist you with Employment Counseling and Disputes, Executive Separation and Severance, Trade Secret Protection, and Noncompetes click the respective link.