For Now, Noncompete Agreements Remain in Force
Over the past decade, sentiment has built nationwide to make noncompete agreements illegal. Four states have banned them outright—Minnesota, North Dakota, Oklahoma and California. A number of states limit their use based on the income of the employee affected by the agreement. Approximately half of all states place some type of restriction and the Federal Trade Commission weighed in earlier this year, voting in April to ban noncompete agreements for most American workers. Where does New York stand on the issue?
Governor Vetoes State Ban
In 2023, it appeared that New York might join those states outlawing noncompete agreements. The New York legislature sent a new law to Governor Kathy Hochul’s desk in late 2023, but the Governor chose to veto the bill. In a memo that accompanied the veto, the governor essentially stated that the law, as written, went too far, potentially prohibiting all noncompete agreements across the state. She further indicated that she would entertain a revised law that protected lower income workers without risking the loss of businesses in the state. Accordingly, under New York state law, noncompete agreements may still be enforced.
Federal Ban Struck Down by Texas Judge
Almost immediately after the FTC voted to make noncompete agreements illegal, lawsuits were filed in federal courts across the country, challenging the ruling. In August, a federal judge in the Northern District of Texas struck down the FTC’s decision, finding that the administrative agency had overstepped its legal authority, attempting to legislate when it only had “rule-making” authority. As a consequence, New York noncompete agreements remain permissible under federal law as well.
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.