New York Gov. Kathy Hochul (D) has vetoed a bill that would have banned most noncompete agreements in the state.
“In so doing, she called for modifications to the legislation that would protect ‘middle-class and low-wage workers’ from noncompete agreements, while balancing companies’ interests in using such agreements with higher-wage earners,” according to a blog post from attorneys at Ogletree Deakins. The governor’s action came Dec. 22.
The New York bill had been opposed by Wall Street businesses, which “argued the agreements are necessary to protect investment strategies and keep highly paid workers from leaving their companies with prized inside information and working for an industry rival,” the Associated Press reported.
Meanwhile, in the state of California, all current pre- and post-hire noncompete agreements will be voided as of Feb. 14 under a bill recently signed by Gov. Gavin Newsom (D).
At the national level, almost a year ago, the federal government introduced a proposed rule that would prohibit employers from entering into noncompetition agreements with employees. Senior living and care industry advocates told the Federal Trade Commission that a one-size-fits-all approach shouldn’t be the goal. The final rule has not been issued.
The FTC had written Hochul in October, urging her to sign the New York legislation into law. The federal agency cited evidence that “noncompete clauses reduce earnings for both workers who are and who are not covered by noncompete clauses, as well as increase racial and gender wage gaps.”
Further, the FTC called noncompete agreements “exploitative and coercive, both at the time of contracting and at departure, for all workers except for senior executives.”
