New York Governor Kathy Hochul Vetoes Senate Bill Aimed at Non-Compete Agreements
On December 22, 2023, New York Governor Kathy Hochul vetoed New York Senate Bill S3100A, which broadly prohibited employee non-compete agreements. The bill had previously been passed by both New York legislative houses in June 2023. The bill had been criticized by Governor Hochul for three main reasons: 1) the bill did not contain a salary cap, but instead broadly prohibited non-compete agreements at every level of employment, no matter the compensation level or bargaining power of the employee, 2) there was no carve-out for non-competes entered into in connection with the sale of a business, and 3) there was no exception for non-compete agreements or provisions providing for the forfeiture of compensation if an employee left to join a competitor or non-compete agreements providing for garden leave pay (pay during the non-competition period) in place of competition.
In November 2023, Governor Hochul had expressed concerns regarding the scope of the bill, stating that she supported limiting the use of non-compete agreements for low to middle income workers earning under $250,000. However, when the bill was sent to Governor Hochul for approval, the bill was not amended to address the above concerns or to put a salary cap on prohibited non-competes. Within the 10-day consideration period after the bill was sent to Governor Hochul, Governor Hochul and the New York legislature could not come to agreement with respect to a salary cap, which Governor Hochul had previously stated was vital to protect lower to middle income employees, while permitting businesses to retain highly compensated individuals. The legislature is expected to reintroduce non-compete legislation in 2024.
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