Seyfarth Synopsis: Efforts to prohibit non-compete agreements in New York State are back to square one following Governor Hochul’s veto of an outright ban in late December 2023.

As we reported most recently here, New York was set to join a number of states that prohibit non-compete clauses in employment agreements. In June 2023, the Legislature passed a bill that would have declared an outright ban on such agreements, with no exceptions, but its formal “delivery” to the Governor was delayed due to well-publicized concerns that the bill was too draconian, including, among other concerns, that it applied to all workers regardless of income and did not permit non-competes as a term of the sale of a business. 

On December 12, 2023, the bill was finally delivered to the Governor, triggering a ten-day review period.  Around the same time, a revised bill, which did include income thresholds and other exceptions to the ban, was circulating in the State Senate for possible consideration as a compromise approach. On December 22, 2023, Governor Hochul vetoed the June bill in its entirety. Reports from Albany have indicated that the veto will end any current consideration of a ban, partial or otherwise, and that the Legislature will not attempt to override the veto. Moreover, reports from Albany have indicated that the veto will end any current consideration of a ban, partial or otherwise, including the compromise proposal. 

Any efforts to ban non-compete agreements in New York State, in full or in part, will now have to await the new legislative session scheduled to begin in early 2024.

Seyfarth will continue to monitor and report on any new developments in this area.