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Gov. Hochul to Determine the Future of Noncompete Agreements in NY

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New York Governor Kathy Hochul has until the year’s end to decide on a bill that could effectively ban noncompete clauses. This conflict has sparked a fierce debate between major business organizations and powerful labor unions. One potential compromise that has been floated is a $250,000 salary threshold, which would allow higher-wage workers to be still subject to noncompete agreements while protecting lower-wage workers. However, many believe that this amount is far too low and that noncompete clauses have the effect of stagnating wages. The non-starter for one of the bill’s major supporters, the union SAG-AFTRA, is the salary threshold, which they believe would be a huge mistake.

The Federal Trade Commission is weighing a federal ban on noncompete agreements, arguing that it would increase worker earnings by an estimated $250 billion to $296 billion per year. Hochul has expressed her belief that a federal noncompete ban would be ideal, as it could prevent the competition between states that would result in employers moving to states that are more friendly toward their interests.

Time is running short, as Hochul has 164 bills to decide on before the year’s end. There is potential for a deal to be made with Hochul, but so far, no agreement has been reached.

SAG-AFTRA is not supportive of an income cap and believes that a ban can work if it accounts for protecting trade secrets and intellectual property. They point to California, which has imposed a near-total ban on noncompete agreements, as an example. If an agreement is to be made, they would like to see actual bill language before committing to anything and are opposed to a hard cap, such as the $250,000 cap Hochul is seeking.

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Photo credit gothamist.com

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