New York Gov. Kathy Hochul vetoed a bill that would have prohibited noncompete agreements, The Wall Street Journal reported Dec. 23.
Ms. Hochul said that she supported banning noncompete agreements for low and middle-income workers, according to the report. She had pitched a compromise with state legislators that would keep noncompete agreements for higher-paid employees. Negotiations between the governor and lawmakers were unsuccessful, however. The Journal said the veto was expected.
"New York has a highly competitive economic climate and is home to many different industries," Ms. Hochul said in her veto statement, according to the report. "These companies have legitimate interests that cannot be met with the legislation's one-size-fits-all approach."
The bill — S.3100A and A.1278B — passed both houses of the state Legislature in June. The legislation would prohibit employers from seeking, requiring, demanding or accepting noncompete agreements from virtually any New Yorker upon enactment of the law. The bill would apply to nonprofit entities, which make up the large majority of health systems and hospitals in the state.
Ms. Hochul's proposed limitations included a compensation threshold in which noncompete agreements are permitted for earners of $250,000 or more in the interest of potentially reducing any incentive for retaining businesses and corporations to leave in the state. Other states have taken the approach of establishing a pay threshold for noncompete agreements, while four states — California, Minnesota, North Dakota and Oklahoma — have banned the clauses entirely.
About 1 in 5 American workers — approximately 30 million people — are subject to a noncompete clause, according to figures from the FTC, which is preparing to release a final rule to restrict use of the covenant. The American Hospital Association has expressed opposition to the federal agency's proposed ban on noncompetes, the scope of which left hospitals with questions.