On December 22, 2023, New York Governor Kathy Hochul declined to sign legislation (S3100) that would have outlawed noncompete clauses in virtually all employment contracts. If it had gone into effect, New York would have been the fifth state to ban non-competes outright, joining California, North Dakota, Oklahoma, and, most recently, Minnesota.

In vetoing the bill, however, Governor Hochul did not forgo the possibility of a future ban. Rather, she expressed concern with the current bill’s “one-size-fits-all” approach – particularly considering the varying industries that call New York home, and their interests and needs to retain high-paid workers.

These comments and discussions between the Governor and the New York State Senate appear to signal that it is possible that a noncompete ban may still be possible in the near future – if a salary threshold can be met. Prior to the veto, the Governor and the Senate had discussed exempting workers earning more than $300,000 per year. New York business leaders gave feedback that even a lower threshold of $250,000 could be a workable number.

Another issue not addressed by the most recent proposed legislation is the exemption of noncompete provisions between buyers and sellers in the sales of businesses. Many other states with such bans or restrictions on noncompete agreements have such a carve-out.

While the recent veto is a victory for New York employers, the reality is that noncompete provisions are still heavily under attack. Employers should carefully evaluate their policies and practices that protect their confidential information, trade secrets, and other valuable business interests to ensure that even if noncompete agreements are one day banned, they are adequately protected.