New York Governor Vetoes Comprehensive Non-Compete Agreement Ban
Late last month, Governor Kathy Hochul took a significant step by vetoing a bill that aimed to enact a sweeping prohibition on almost all non-compete agreements in the state of New York.
The bill, introduced in June 2023, had ambitious goals of banning non-compete agreements for both high-ranking business professionals and low- to middle-income employees. Essentially, it sought to create a blanket ban that would apply to employees across all earning levels.
Negotiation Attempts and Threshold Proposal
Governor Hochul engaged in negotiations with lawmakers in an effort to find common ground. The proposed compromise involved permitting individuals earning more than $250,000 per year to enter into non-compete agreements. Simultaneously, those below this income threshold would retain the flexibility to transition between jobs within their respective industries.
Veto Decision and Nuanced Approach
In her veto letter, Governor Hochul emphasized her preference for moving away from a “one-size-fits-all-approach” when it comes to non-compete agreements. She acknowledged the utility of such agreements in retaining employees while expressing a commitment to finding the right balance. The veto, therefore, serves as a temporary halt to the statewide ban on non-compete agreements in New York.
While New York’s non-compete ban remains on pause, attention shifts to the Federal Trade Commission (FTC), which is expected to vote on a proposed nationwide ban on non-compete agreements in the coming Spring. This looming decision by the FTC underscores the need for vigilance among New York employers.
Cautionary Note for New York Employers
Governor Hochul’s veto should not be seen as an invitation for complacency among New York employers. The potential for a nationwide ban from the FTC emphasizes the evolving landscape of non-compete agreements. Employers in the State should stay informed and be prepared for further developments.
What to Do Next?
Costello, Cooney & Fearon, PLLC, will continue actively monitoring developments involving non-compete agreements and remains available to provide guidance and discuss practical approaches for addressing any concerns employers may have. As the situation unfolds, our expertise can be a valuable resource for navigating the complexities of non-compete agreements in New York.