Hochul plans to veto ban on non-compete agreements in New York

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Gov. Kathy Hochul plans to veto a bill that would have banned the use of non-compete agreements in New York after a furious lobbying effort by Wall Street and other powerful industries that strongly opposed the measure, according to two people. with knowledge of the negotiations on the invoice. Hochul was expected to veto the bill later Friday.

Democrats who control the state legislature passed the bill in June, wanting New York to join other states that had cracked down on the use of non-compete agreements, which companies use to prevent employees from working for a company. competitor for a set period of time after quitting. a job.

Supporters of the bill argued that the agreements have unfairly trapped a number of workers, including hairdressers, engineers and doctors, who give up their right to go work for a competitor.

But Hochul, a fellow Democrat, believed the ban went too far and sought to limit its scope so that it applied only to lower-wage workers. The ban was opposed by high-powered banks and other large corporations that rely heavily on non-compete agreements to prevent high-level employees (from C-suite executives to bankers and brokers) from taking clients and intellectual property to a competitor.

As the year-end deadline to act on the bill approached, Hochul attempted to negotiate amendments this week that would appease both business groups and Democratic state lawmakers. Negotiations broke down Friday, according to the two people, who were not authorized to publicly discuss the veto before the governor's official announcement. Among other things, it appeared that the parties could not agree on how to calculate an income threshold that would have maintained the ban for low-wage workers but allowed agreements to persist for well-paid workers such as those in the service industry. financial. .

When asked for comment, a spokesperson for Hochul would only say that the governor was still reviewing the legislation. Mike Murphy, a spokesman for Andrea Stewart-Cousins, the state Senate majority leader, said Senate Democrats were “disappointed.”

Noncompete agreements have proliferated across the economy in recent years: Between 18 and 45 percent of private-sector workers may be subject to them, surveys show. Critics argue that restrictive clauses impede the free movement of labor and place an unfair burden on a constellation of workers, especially those in low-paid, low-skilled jobs.

Governments have responded in the same way. About half of the states in the country have imposed strict limits on non-compete clauses, and some states, such as Minnesota and California, have banned them altogether. Under President Biden, the Federal Trade Commission is exploring a national ban on companies requiring workers to sign the agreements.

Legislation to ban noncompete agreements in New York, spearheaded by state Sen. Sean Ryan of Buffalo and Assemblywoman Latoya Joyner of the Bronx, flew under the radar when Democratic lawmakers passed it at the end of this summer's legislative session.

But when its potential impact on New York City's financial industry became clear, the state's most powerful business groups quickly mobilized to oppose it. Among them were the Business Council and the Partnership for New York City, which represents big-name banks and investment firms such as Goldman Sachs and JPMorgan Chase & Company.

Warning of the dire effects the ban could have on a company's ability to retain top employees in one of the world's most important financial capitals, the groups used their money and influence to pressure the governor, pushing her to soften the bill to guarantee would not apply to higher-income workers.

Lawmakers met with the governor's office several times this week to negotiate possible changes and exceptions. The governor's team initially pushed to ban the agreements for workers making less than $250,000 a year, while Senate Democrats first insisted on a threshold of up to $500,000 before lowering it to $300,000, according to two people with knowledge of the negotiations.

The sides appeared unable to resolve their differences over such minutiae as how bonuses and stock options, which can make up a large portion of an employee's compensation on Wall Street, should be counted.

Hochul has yet to take action on several other bills that lawmakers passed this year.

It was not yet clear whether the governor would sign a wide-ranging environmental measure aimed at curbing state spending on products that contribute to deforestation. Also in limbo was a transparency bill that would require limited liability companies to disclose their owners, information that would be made public in a searchable database.

Late Friday, Hochul signed a measure that will move most county and city elections to even years, which she said would increase turnout and save taxpayers money. The legislation was celebrated by Democrats, who tend to do better in elections where turnout is higher. Republicans and some members of county government opposed the measure, arguing that it could cause local issues to be overshadowed by national ones.

Grace Ashford contributed reports.



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