Governor Vetoes Legislative Ban | FTC May Ban Noncompete Agreements Nationwide
In 2023, New York joined a growing list of states seeking to impose an outright ban on noncompete agreements, as the state legislature passed a bill rendering such documents invalid. After pressure from employers statewide, however, Governor Kathy Hochul vetoed the bill. Legislators say they currently lack the support to override the veto. As a consequence, noncompete clauses or agreements are still enforceable in New York, provided they are reasonable with respect to the scope of work involved, the length of time, and the geographical area covered.
The Potential for a National Prohibition of Noncompete Agreements
Five other states have already made noncompete agreements illegal—California, Minnesota, Colorado, Oklahoma and North Dakota have already banned them. Business analysts see it as part of a larger trend—a rule proposed by the Federal Trade Commission, which would potentially outlaw noncompete agreements across the country, has elicited an unusually high level of response from consumers, leading the FTC to postpone a vote on the potential ban. Officials speculate that the FTC will address the issue as early as April, 2024.
Officials stress that a ban on noncompete agreements would likely not apply to non-solicitation and confidentiality agreements.
What the Potential Ban Means for Employers
In light of the potential invalidation of noncompete agreements, employers should carefully reassess how they protect proprietary information and other valuable business assets. Can the interests that you’re currently protecting through a noncompete agreement be just as effectively protected by a confidentiality or non-solicitation provision. If your noncompete agreements are rendered unenforceable, can you require that employees sign a new non-solicitation or confidentiality agreement?
Let Stephen Hans & Associates Handle Your Employment Law Concerns
At Stephen Hans & Associates, our attorneys are glad to answer your questions and provide legal advice. Years of experience have provided us with extensive knowledge regarding employment law. We have successfully represented many employers throughout the greater New York City area in litigation involving workplace disputes. Our offices are conveniently located in Long Island City with easy access from Manhattan.