On December 22, 2023 Governor Hochul vetoed Bill A01278. This bill would have fundamentally altered New York State's Labor Law by prohibiting non-compete agreements and additional restrictive covenants in labor and employment contracts.
This bill would have addressed the usage of non-compete agreements in employment contracts. It defined critical terms and highlighted that employers, their representatives, or officers of corporations could not solicit, demand, or accept a non-compete agreement from a covered individual. However, it didn't prohibit employers from entering into agreements that protected trade secrets, client information, or client solicitation.
The justification behind this legislation was grounded in the adverse impact of non-compete agreements on New York's labor market and economy. These agreements purportedly curtailed workers’ mobility, limiting their ability to explore better employment opportunities and potentially stifling competitive wages and benefits.
The federal government has shown interest in a nationwide ban on non-compete agreements. New York could have lead the charge in fostering a more open and competitive labor market by codifying this ban into state law.
Now, non-competes live on and companies hiring those with non-competes should be worried about tortious interference with a contract claims being levied against them.
To learn more about Bill A01278, click here.
