Not Fooling Around: Critical New York State Legislative Updates for Employers as April Begins

During the first quarter of 2025, the New York State legislature and Governor Kathy Hochul have been actively advancing several initiatives that – if passed and signed – will require New York employers to adapt their policies and practices to ensure compliance, and also provide a significant measure of relief for employers from weekly-pay class actions.

Here is a breakdown of these pending laws that have gained early traction:

Non-Compete Agreements: Following the New York State legislature’s failed attempt in 2023 to ban noncompete agreements, and likely acknowledging that the FTC’s initiative to ban noncompete agreements nationwide have stalled (see here), the State Senate Is considering a more narrowly-tailored bill (S4641) that would ban most non-compete agreements in New York, but carve out some notable exceptions, including for most highly compensated individuals (earning over $500,000 annually) and restrictive covenants that are included in the sale of a business. If passed, the bill would apply to new or modified non-compete agreements, but not retroactively. As for available remedies, the bill would permit a court to void any illegal non-compete agreements and “order all appropriate relief, including enjoining the conduct of any person or employer; ordering payment of liquidated damages; and awarding lost compensation, compensatory damages, reasonable attorneys’ fees and costs” to the covered individual. The bill is currently pending in the Senate’s Labor Committee.
Stop-Work Orders for Employee Misclassification: Senate Bill S1514 empowers the Labor Commissioner to issue stop-work orders against an employer that misclassifies employees as independent contractors or provides false information to insurance companies regarding the number of its employees for purposes of unemployment insurance, health insurance and workers’ compensation. Under the bill, employers would receive 72-hours’ written notice to address violations before the stop-work order would be enforced. Penalties would range from $1,000 to $5,000 per day, and affected employees would be entitled to their regular pay for up to ten days. Employers would have the right within ten days of issuance of the stop-work order to request a hearing to contest the order. This bill has passed the Senate and is pending in the Assembly.
Severance “Ultimatums”: The No Severance Ultimatums Act (“NSUA”) would apply the requirements of the federal Older Workers Benefits Protection Act to releases of claims in any agreement between an employer and an employee for severance pay. Specifically, the NSUA would mandate that employees have at least 21 business days to review severance agreements before signing and seven days thereafter to revoke the agreement. The bill was recently passed by the Senate and is pending in the Assembly.
Weekly Pay: Governor Hochul has included in her 2026 Fiscal Year Executive Budget a proposal entitled “Limit Liquidated Damages in Certain Frequency of Pay Violations.” Labor Law section 191 generally requires “manual workers” to be paid weekly. As discussed here, two of New York’s appellate courts have issued conflicting opinions whether the law allows employees to sue their employers and recover liquidated damages, and the Court of Appeals has not ruled on the issue. The Governor’s proposal would amend Section 198 of the Labor Law (the statute’s remedial section) to limit liquidated damages in weekly pay cases provided the employee has received all required pay on a bi-weekly basis. The Governor included a similar proposal in her 2025 budget, but the Legislature did not take it up. There is no indication thus far that this year’s proposal is moving toward passage, but that could change as the legislative session continues.

Seyfarth will continue to monitor and report on any new developments with respect to these and other legislative efforts affecting employers. In the meantime, please feel free to reach out to the authors of this alert, or your favorite Seyfarth attorney, if you have any questions.