On December 22, 2023, New York Governor Kathy Hochul vetoed a June 2023 bill that would have prohibited most non-compete agreements between employers and employees in New York State. The veto comes after Governor Hochul sought unsuccessfully to narrow the scope of the bill.
Governor Hochul has stated that she supports eliminating non-compete agreements for low- and middle-wage earners, but not for highly compensated workers. According to The Wall Street Journal, Governor Hochul proposed permitting individuals earning more than $250,000 per year to enter into non-compete agreements, but was unable to reach an agreement on limitations to the bill in negotiations with Democratic leaders in the New York legislature.
In a statement provided with her veto, Governor Hochul explained that “New York has a highly competitive climate and is home to many different industries. These companies have legitimate interests that cannot be met with the legislation’s one-size-fits-all approach.” As a result of the veto, non-compete agreements will continue to be enforceable in New York to the extent that they are necessary to protect an employer’s legitimate business interests.
As we have previously described, in January 2023 the Federal Trade Commission (“FTC”) issued a notice of proposed rulemaking that, if implemented, would impose a nationwide ban on non-compete agreements. We expect the FTC to issue a final rule in 2024.