Governor Hochul Vetoes Bill Banning Non-Competes in New York

Governor Hochul vetoed a bill passed by the New York State legislature that would have effectively banned all non-compete agreements.  In her December 26, 2023 veto message, Governor Hochul cited New York’s “highly competitive economic climate” and the “legitimate interests” of companies to “retain highly compensated talent,” while stating that she has “long supported limits on non-compete agreements for middle-class and low-wage workers.” The Governor observed as well that she had “proposed banning non-compete agreements for anyone making below the median wage in New York” in her first Executive Budget. Governor Hochul stated that she remains open to “future legislation that achieves the right balance.”

New York employers may continue to require employees to sign non-compete agreements as a condition of employment.  Non-compete agreements that are overly broad, however, may be deemed unenforceable by courts under New York law. Therefore, employers covered by New York law should continue to ensure that their non-compete agreements satisfy New York’s applicable requirements, such as extending only to the extent necessary to protect legitimate business interests, reflecting restrictions that are reasonable in time, geographic reach and otherwise, not being unreasonably burdensome to the employee, and avoiding harm to the general public.