New York Non-Compete Update: Governor Will Not Sign Non-Compete Bill Unless Changes Are First Made

In her first public comments since its passage, New York Governor Kathy Hochul expressed a desire to see changes in New York’s proposed ban on non-compete agreements (SB 3100) before she would consider signing the bill.  We summarized the proposed bill here and further commented on some of its important shortcomings in this subsequent post here.  As reported by Bloomberg and the Times Union, Governor Hochul told reporters:

What I’m looking at right now is striking the right balance between protecting low and middle-income workers, giving them flexibility to have mobility to go from job to job as they continue up the ladder of success … But those who are successful have a lot more negotiation power, and they’re at the industries that are an important part of our economy here in New York.

To achieve this balance, Governor Hochul wants any revised bill to include a sale-of-business exception and potentially a $250,000 salary threshold.  The bill’s sponsor, New York State Senator Sean M. Ryan, has already conveyed his willingness to negotiate, particularly as to the inclusion of a sale-of-business exception.  Senator Ryan seemed less sanguine on the salary threshold because he believes that “[a] salary threshold that restricts only high-end executives in a small upstate town could restrict every worker at a Manhattan tech company.” 

Governor Hochul and Senator Ryan’s statements suggest that the parties may be considering amending the bill via “chapter amendments”—where the Governor makes a deal with Senator Ryan and the legislature that she will sign the bill if certain revisions and amendments are made.  While Governor Hochul has not yet released any written statement memorializing her views, the inclusion of a sale-of-business exception would bring the proposed law in line with California’s non-compete law and the Federal Trade Commission’s proposed rule.  And, if the legislature adds a salary threshold, New York will join several states that include such thresholds for non-competes, including Colorado, Illinois, Maine and Washington.  

Governor Hochul’s comments certainly draw a proverbial line in the sand and telegraph her willingness to sign non-compete legislation only if it strikes a balance between protecting workers and ensuring that New York remains an appealing home to industries that are, in her estimation, “an important part of our economy here in New York.”  For now, New York employers should continue to prepare for some additional restrictions on the use of non-compete agreements, but with the expectation that the prohibition will be more limited. 

Mintz’s Employment Group will continue monitoring this bill, Governor Hochul’s views, and any other legislative developments, and is, as always, here to assist employers with any compliance issues and obligations. 

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