Hochul plans to impose a veto ban on non-compete agreements in New York
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 from Wall Street and other powerful industries that strongly opposed the measure, according to two people with knowledge of the negotiations on the measure. account. Ms Hochul was expected to veto the bill later on Friday.
Democrats who control the state Legislature passed the bill in June and want New York to join other states that are cracking down on the use of non-compete agreements, which companies use to ban workers from working for certain time to work for a competitor after their departure. a task.
The bill’s supporters argued that the agreements unfairly trapped a slew of workers, from hairstylists to engineers and doctors, who gave up their right to leave to a competitor.
But Ms. Hochul, a fellow Democrat, believed the ban went too far, and she sought to limit its scope so that it applied only to lower-wage workers. The ban was opposed by powerful banks and other major companies that rely heavily on non-compete agreements to prevent top employees — from high-level executives to bankers and brokers — from taking customers and intellectual property to a competitor.
As the year-end deadline for acting on the bill approached, Ms. Hochul tried this week to negotiate amendments that would appease both business groups and Democratic state lawmakers. Negotiations collapsed 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-paid workers but allowed the agreements to continue for high-paid workers such as those in the financial services. .
Mike Murphy, a spokesman for Senate Majority Leader Andrea Stewart-Cousins, said Senate Democrats were “disappointed.”
Non-compete agreements have been on the rise across the economy in recent years: Between 18 percent Unpleasant 45 percent of private sector workers may be tied to it, according to studies. Critics argue that the restrictive clauses hinder 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 kind. About half of US states have placed strict limits on non-compete agreements, and some states, such as Minnesota and California, have even banned them altogether. Under President Biden, the Federal Trade Commission is exploring a national ban on companies that require workers to sign the agreements.
The legislation to ban non-compete agreements in New York largely flew under the radar when Democratic lawmakers passed it at the end of the legislative session last summer, led by Senator Sean Ryan of Buffalo and Assemblyman Latoya Joyner of the Bronx.
But as its potential impact on New York City’s financial sector became clear, the state’s most powerful business groups moved quickly to oppose it. Among them were the Business Council and the Partnership for New York City, which represents major banks and investment firms such as Goldman Sachs and JPMorgan Chase & Co.
The groups warned of the potentially serious impact the ban would have on a company’s ability to retain top employees in one of the world’s top financial capitals. They used their money and power to lobby the governor and push her to water down the bill. ensuring that this would not apply to the highest-earning 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 deals for workers making less than $250,000 a year, while Senate Democrats first pushed for a $500,000 threshold before reducing it to $300,000, according to two people with knowledge of the negotiations.
The sides seemed unable to explain their disagreements over details such as how to count bonuses and stock options, both of which can make up a large portion of a Wall Street worker’s compensation.
Ms. Hochul has yet to take action on several other bills that lawmakers passed earlier this year.
It was still unclear whether the governor would sign a sweeping environmental measure aimed at reining in state spending on products that contribute to deforestation. Also in limbo was a transparency law that would have required limited liability companies to disclose their owners, information that would have become public in a searchable database.
Late Friday, Ms. Hochul signed a measure that will shift most provincial and municipal elections to even years, which she said would increase turnout and save taxpayer money. The legislation was celebrated by Democrats, who tend to do better in elections where voter turnout is higher. Republicans and some in the county government opposed the measure, saying it could lead to local issues being drowned out by national issues.