Governor Hochul Vetoes Bill That Would Have Banned Non Compete Agreements

C.G. Hoffman

A hotly contested and highly controversial bill that would have banned non compete agreements, was vetoed by NY Governor Kathy Hochul this week. The governor said that while she supports the easing of restrictions on low and middle class workers seeking better employment, the bill in its current form was too vague and “one size fits all.”

The bill had been strongly supported by labor unions and the Federal Trade Commission, who have argued that the non-compete agreements many employees are forced to sign hurt workers and stifle economic growth. The bill was fiercely opposed by Wall Street and top businesses in the city, who claimed that such agreements were necessary in order to protect business strategies and keep talented employees from absconding to rival companies with insider information.

While the agreements have long been associated with highly paid workers, the reality is that 1 in 5 American workers are now bound by non compete agreements. The Federal Trade Commission has proposed its own rule to eliminate all noncompete agreements nationwide because they unfairly reduce competition, estimating that banning the agreements will increase workers’ earnings by up to $296 billion per year.