New York Governor Vetoes Legislation That Would Have Banned Post-Employment Noncompete Agreements

As we reported previously, in June 2023, both houses of the New York State legislature passed legislation that would have banned post-employment noncompete agreements in New York. While expectations had been high early on that Governor Hochul would sign the bill into law, she vetoed it on December 22, 2023, rejecting what she described as "a one-size-fits-all-approach."

Opposition

Seeking to protect trade secrets and retain talent while keeping jobs in New York State, business groups including the Business Council and the Partnership for New York City had lobbied the Governor to veto the legislation, as did the New York City Bar Association. And indeed, the Governor was prepared to sign legislation that would have allowed "highly compensated talent" to be subject to noncompetes. Hochul favored a potential compromise that would have banned post-employment noncompetes only for those employees whose salaries fall below $250,000. Last-minute efforts to arrive at what the Governor called a "reasonable compromise" were unsuccessful, however.

Explaining her veto, Hochul noted, "I continue to recognize the urgent need to restrict noncompete agreements for middle-class and low-wage workers, and am open to future legislation that achieves the right balance."

What's Next

We expect legislation on this subject to be reintroduced in 2024, and we will continue to monitor and report on any key developments.