New York Governor Vetoes Proposed State Ban on Employee Non-Compete Agreements
In December of 2023, New York Governor Kathy Hochul vetoed a state bill that would have effectively outlawed employee non-compete agreements. As such, workplace non-compete remain lawful—assuming they meet existing legal requirements—in the state. Here, our New York City non-compete agreement lawyer explains the law, the veto, and what it means for the future of employee non-compete agreements in New York.
Background: New York Lawmakers Moved to Ban Employee Non-Competes
Last year, legislative action was taken to outright ban employee non-compete agreements in New York State. In June 2023, New York legislators passed a bill aimed at instituting a sweeping ban on employee non-compete agreements. Non-competes—which are effectively contracts that restrict employees from joining competing firms or starting similar businesses within a certain time frame after leaving an employer—are contentious. The legislation that passed in New York was extremely broad. It would have barred virtually all non-compete agreements.
Governor Hochul Vetoed the Bill on Grounds Total Ban is Too Broad
The law will not take effect. In December of 2023, New York Governor Kathy Hochul vetoed the bill. In doing so, she cited serious concerns over the legislation’s breadth and its potential impact on New York’s diverse and competitive business environment. However, in vetoing the proposed law as it was written, Governor Hochul expressed support for limiting non-compete agreements. She noted that she would support measures to restrict non-competes if they were tailored to protect middle-class and low-wage workers. Nonetheless, she argued that the proposed bill’s “one-size-fits-all” approach failed to consider the nuanced needs of different industries. As it was drafted, the non-compete ban would have applied to all employees in New York State—meaning even a CEO with a very large compensation package would not have been permitted to sign a non-compete.
What Comes Next for Non-Competes in New York?
It remains to be seen. Non-competes are still a live political issue in both New York State and for federal policy. Indeed, the veto by New York Governor Hochul has set the stage for further legislative efforts. Several key state lawmakers have already indicated their plans to introduce a revised bill in 2024. The new proposal aims to address the governor’s concerns. It is likely to include limitations on non-competes for certain categories of employees—such as those who do not meet a specific compensation threshold. With that type of language, the non-compete ban would be focused on providing protections on non-executive, lower-wage workers. Still, as of early 2024, employee non-compete agreements remain lawful in New York as long as they satisfy the pre-existing state requirements, such as ensuring that the language is non overly broad.
Contact Our New York City Employee Non-Compete Agreement Attorney Today
At Poulos LoPiccolo PC, our New York City employment law attorneys have extensive experience with non-compete agreements. If you have any questions about an existing or proposed non-compete, we can help. Contact our employee rights attorneys today to set up your confidential case review. From our Manhattan office, we represent employees throughout New York City.
Source:
apnews.com/article/noncompete-agreement-bill-veto-new-york-61e53ad13f41f1da574740438ee34e63
