In late breaking news out of New York, Governor Kathy Hochul has vetoed legislation that would have imposed the most restrictive state-level ban on employee non-competes in the United States. Last June, the New York State Assembly passed S3100, which if signed by Governor Hochul, would have voided any contract restraining anyone from engaging in a lawful profession, trade or business of any kind. It also would have given employees a private right of action and, significantly, did not contain an exception for the sale of businesses, making it more restrictive than even California’s draconian non-compete laws.
The bill faced fierce opposition by Wall Street and other industries that heavily rely on non-competes. As reported by the New York Times, Governor Hochul attempted to negotiate with the bill’s supporters to narrow its scope so that it applied only to lower-wage workers. However, when negotiations broke down, Governor Hochul vetoed the bill.
The bill’s sponsor promises to reintroduce the legislation this year. We don’t claim to be fortune tellers, but the odds of a watered-down restriction on non-competes in New York seem likely in 2024, continuing the hostility states across the country are showing to employee non-competes. However, Governor Hochul’s decision to veto S3100 is an encouraging sign because it recognizes that non-competes play an important role in protecting legitimate business interests. We are watching this space closely and will continue to report developments on our blog.