January 4, 2024
New York’s Non-Compete Legislation Vetoed
In prior blogs about the FTC’s proposed ban on the use of non-competes and the many state-level developments in this space, we shared information about legislation in New York that contemplated a very broad ban and was awaiting the Governor’s signature. On December 22, Governor Kathy Hochul vetoed the legislation. This Mintz alert describes the lobbying campaign by groups that opposed the bill and the Governor’s concerns:
The Governor had previously indicated that while she supported a more moderate ban on non-competition provisions that would prohibit mobility restrictions for lower and medium income earners, the Governor wanted to see the incorporation of both a salary threshold for the use of non-competes (i.e., such that higher earners could still be subject to non-compete provisions) and an exception for sale-of-business situations. The bill’s legislative sponsors balked at the “low” $250,000 salary threshold proposed by the Governor and negotiations stalled over not only the amount of the salary threshold but how it would be calculated (e.g., whether and how the threshold amount would include bonuses and commissions earned by New York employees). Ultimately, after negotiations with bill sponsors deteriorated over the past week, the Governor vetoed the legislation, expressing that she had “attempted to work with the Legislature in good faith on a reasonable compromise [while] allowing New York’s businesses to retain highly compensated talent.”
The alert says that we all need to continue to monitor non-compete regulatory developments in other states, at the national level and in New York as well since state legislators have noted a plan to reintroduce a bill in the next legislative session.
– Meredith Ervine