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Business and Labor Tussle Over New York’s Proposed Ban on Non-Compete Agreements

S.J. Steinhardt
Published Date:
Nov 30, 2023

noncompete agreement

New York Gov. Kathy Hochul is negotiating with legislators on a possible compromise over the state’s proposed ban on non-compete agreements, Crain’s New York Business reported.

Business groups oppose the governor signing the bill, which was passed in June, while labor interests are in favor.

The Public Policy Institute of the State of New York, an affiliate of the Business Council of New York, launched a $1 million ad campaign last month to sway opinion against the legislation, The Associated Press reported. Wall Street firms see non-compete agreements as important to protecting investment strategies and keeping highly paid workers from departing with proprietary information.

The Partnership for New York City, a business lobby, circulated a memo that it sent to the governor offering amendments that would exempt well-paid workers from a ban, The New York Times reported.

“We have so many high-level people in the financial services industry where it’s very important that when they’re paying people tens of millions of dollars a year and giving them complete access to inside information, that they can’t just jump to a rival,” said Kathy Wylde, the organization’s president and CEO.

Supporters of a ban argue that non-competes allow companies to impede the free movement of labor and suppress wages.

“Over the years, they’ve kind of filtered down throughout the economy and are now binding people who there’s no reason for them to be bound by a non-compete, other than driving down their ability to negotiate a higher wage rate,” said Pat Garofalo, the director of state and local policy at the anti-monopoly nonprofit American Economic Liberties Project, in an interview with the Times.

“We want people to freely go from job to job, and a lot of people sign them when they get onboarded, just when they’re signing their health insurance papers, and they don’t even know they’re signing a non-compete,” the bill’s sponsor, New York state Sen. Sean Ryan (D), told the Times.

Currently, only California, Minnesota, North Dakota and Oklahoma have banned non-compete agreements entirely, while other states have enacted various restrictions, the Times reported. About one in five American workers, nearly 30 million people, are bound by non-compete agreements, according to the Federal Trade Commission (FTC), AP reported. In July, the FTC proposed a ban on them, calling their use “a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses.”

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