Governor Hochul Vetoes Bill That Would Have Banned Non-Compete Agreements in New York State

On December 22, 2023, Governor Kathy Hochul vetoed a bill that would have prohibited non-compete agreements for employees and various service providers in New York State. The proposed legislation, which had passed both houses of the New York legislature back on June 20, 2023 (see our prior Client Alert here) would have imposed nearly universal restrictions on non-compete agreements and established New York as one of the most stringent states in the country against such agreements.

Governor Hochul initially seemed to support a limited ban on non-compete agreements for middle and lower wage employees, but expressed concern about the bill’s “one size fits all” approach.

As a result, non-compete agreements for employees and service providers generally remain enforceable in New York, so long as they are deemed reasonable and serve a legitimate protectable business interest.  However, both Governor Hochul and the principal sponsors of the bill have expressed an intent to revisit the non-compete ban, and employers could expect to see a revised version of the bill presented during the 2024 legislative session.

Our Executive Compensation & Employee Benefits and Labor & Employment teams will continue to monitor any further developments related to this legislation and its potential impact for employers and employees working in New York State. If you have any questions or require assistance in navigating these changes, please do not hesitate to contact us.

For more details regarding this new legislation, read our Client Alert below.