Legislation has been introduced in the New York City Council that would prohibit employers in the city from making workers sign noncompete agreements, after a similar effort failed at the state level.
Noncompete agreements are clauses in employment contracts preventing workers from working for competitor companies during or after their current employment, or starting their own competing business.
The move in the council comes after New York Governor Kathy Hochul vetoed a bill passed by the state legislature last December that would have banned most such noncompete agreements throughout the state. Hochul called it a “one size fits all approach”, and expressed her preference for a ban that would protect workers earning less than $250,000 instead of those who are more highly compensated.
“I continue to recognize the urgent need to restrict non-compete agreements for middle-class and low-wage workers, and am open to future legislation that achieves the right balance,” the governor said in her veto message.
Following the governor’s veto, three different bills were introduced recently in the City Council that would amend New York City’s Administrative Code to eliminate or severely limit the use of non-compete agreements.
Bill 140 would bar employers from making non-compete agreements with any worker in New York City and cancel non-compete agreements entered before the law takes effect. The ban would not be limited to non-compete agreements with employees. “Worker” is broadly defined to include any “natural person who works, whether paid or unpaid, for an employer.
Proposed as an alternative to Bill 140, Bill 146 would ban non-compete agreements for low-wage employees, considered a clerical or other worker under the New York Labor Law. Another option, Bill 375, limits non-competes for freelance workers, described as a person or a single-person organization hired or contracted to provide services for payment.
The three bills have now been referred by the City Council to a sub-committee on Consumer and Worker Protection.
During the effort to ban noncompetes at the state level, opponents in the financial industry said the agreements are necessary to protect investment strategies and keep highly paid workers from leaving their companies with inside information to work for an industry rival.
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