Like Federal Officials, State Policymakers Taking On Non-Compete Agreements

As Connecting the Dots reported several times in 2023, the U.S. Federal Trade Commission (FTC) has proposed a new regulation that would make it illegal for an employer to:

• Enter into or attempt to enter into a non-compete with a worker;
• Maintain a non-compete with a worker; or
• Represent to a worker, under certain circumstances, that the worker is subject to a non-compete agreement.

While the federal regulation goes through its required public comment and review process, the issue of non-compete agreements has come up in many states, including New York.

The latest development came on December 22 when Gov. Kathy Hochul (D-N.Y.) vetoed legislation that would have effectively banned non-compete agreements and certain other restrictive covenants for all New York employees, regardless of compensation, job requirements, level within a company, or access to confidential information.

In her veto message, Gov. Hochul wrote, ​“I have long supported limits on non-compete agreements for middle-class and low-wage workers, protecting them from unfair practices that would limit their ability to earn a living.” She also said she hoped to find a balance between protecting low-wage workers and ​“allowing New York’s businesses to retain highly compensated talent.”

We expect more legislation and regulation regarding non-compete agreements to arise at the state level in 2024. Stay tuned to Connecting the Dots for information.