Lawmakers and business leaders are growing more urgent as they push Gov. Kathy Hochul to decide what to do with legislation to ban noncompete agreements as the governor has grown heavy-handed with her veto pen in the last few days, rejecting several measures as the end of the year approaches.
Hochul has until the end of the year to consider a bill that would make noncompete clauses a thing of the past in New York. If signed, it would change state labor law to bar noncompetes, or provisions in employment contracts that restrict where a person can work after their employment ends.
Sponsor Assemblywoman LaToya Joyner said the agreements impact both high and low-paid workers, including home health aides, fitness instructors and chiropractors — most of whom do not understand what they’ve agreed to when they sign their contract.
“People should be able to go out and seek the best economic opportunity that’s best for them,” said Joyner, who chairs the Assembly Labor Committee. “They should be able to seek better wages, job mobility, change of careers [and] many have signed these agreements unknowingly.”
Joyner says the bill aims to promote entrepreneurship and job growth for New York families. The proposal does not apply to confidentiality agreements or non-solicitation deals.
But state business leaders are pushing hard to see it vetoed, or amended, at the very least, arguing they protect employers’ business interests.
“We believe that it will have a very negative impact on the New York state economy, and that’s our concern,” said Paul Zuber, the Business Council of New York State’s executive vice president.
Zuber argues prohibiting noncompetes would drive businesses from the state, especially with increased dependence on remote work.
Financial companies are waging the steepest pushback, with Wall Street firms concerned a ban would allow employees to leave with their top clients.
Zuber worries ending noncompetes in New York also make businesses like manufacturing companies apprehensive about coming to the state. The council is pushing hard to see the measure vetoed after a renewed push by lawmakers post-pandemic.
The business council proposed amendments to ban noncompetes for workers who earn $200,000 a year or less, but Hochul’s office rejected it. It’s a change Joyner rejects, too.
“Why should they be bound by these agreements and not be able to seek better paying opportunities if one arises, just because they’re making $200,000?” she said. “We want to encourage economic growth. We do not want people to be stuck in positions because of these agreements and not be able to reach their economic potential.”
Recent news reports show the state Business Council’s nonprofit arm has led a $1 million veto campaign in an effort to kill the legislation. Representatives with the council would not return requests for comment about the campaign.
Zuber says a large number of businesses from around the state have called him and Hochul’s office to express their opposition to end noncompetes.
“Never in my time and career here in Albany have I received as many calls as I have, from members and from businesses that aren’t even business council members, about concerns with this bill,” Zuber said.
But Joyner says the legislation includes safeguards to protect against, allowing employees to disclose proprietary interests or other confidential trade secrets, and are sufficient business protections for Hochul to sign the bill as-is.
“We feel that these noncompete agreements are basically anti-competitive,” the assemblywoman said. “It restricts the free market, it restricts mobility and we feel that this is a practice that needs to end in New York state. …We hope the governor will listen to not only low-wage workers, but also those higher-income earners who are suffering as well.”
The governor continues to review the legislation, according to Hochul’s office.
It’s estimated between 27.8% and 46.5% of workers in the private sector are subject to noncompete clauses in the United States, according to the Economic Policy Institute. Five states have laws on the books virtually banning all noncompetes, including California, Colorado, Minnesota, North Dakota and Oklahoma.
The Federal Trade Commission is expected to vote on a proposal to nationally ban noncompete agreements for most employment contracts next spring.