Gov. Kathy Hochul will decide the future of noncompete clauses in New York over the next three weeks — and it will likely come down to whether she can strike a compromise among key state lawmakers, business interests and labor unions.
Hochul has until the end of the year to sign or veto a measure that, going forward, would effectively ban noncompete agreements – clauses in many employment contracts that restrict where someone can work after leaving a particular company for a certain period of time. The agreements are often intended to prevent former employees from working for a competitor.
The bill has spurred an end-of-year lobbying war between the state’s major business organizations — including an affiliate of The Business Council, which spent seven figures on an advertisement claiming the measure will destroy the state’s economy — and powerful labor unions, who say noncompete clauses do nothing but harm workers by restricting their freedom to seek work elsewhere.
With the clock ticking, the Democratic governor surprised some last week by publicly floating a compromise backed by the business community: A $250,000 salary threshold, meaning anyone over that amount could still be subject to a noncompete agreement while lower-wage workers would be protected.
But threading the needle on a potential deal with the Legislature has so far proved to be a difficult task, and the bill’s fate hangs in the balance.
State Sen. Sean Ryan of Buffalo, the bill’s Senate sponsor, says he’s open to carving out high-earning finance executives and similar titans of industry — the types of people Hochul says are well-equipped to negotiate noncompete agreements on their own behalf.
But he says a $250,000 salary threshold is far too low.
“We’re trying to come up with a solution that will make it so … the C-suite executives can still stay under noncompetes,” Ryan said. “But $250,000 is way too low for a New York City top executive.”
An estimated 30 million workers…
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