On December 22, 2023, New York Governor Kathy Hochul vetoed proposed legislation that would have banned all employee non-compete agreements in New York. In our June 2023 Legal Update, we outlined the proposed legislation that would have prohibited employers from entering into non-compete agreements with their employees in New York (the Bill). If signed by the Governor, New York would have become the fifth state to outlaw employee non-compete agreements, joining California, Minnesota, North Dakota, and Oklahoma. In her veto, the Governor explained that, while she supports limits on non-compete agreements for “middle-class and low-wage workers, protecting them from unfair practices that would limit their ability to earn a living,” the Bill went too far to gain the Governor’s support. Facing pressure from Wall Street, hospitals, and business groups, the Governor criticized the legislature’s total ban and “one-size-fits-all approach.” Negotiations with the legislature stalled on an appropriate compensation threshold and exceptions, for example, allowing non-compete agreements in connection with the sale of a business.
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