As time was running out for the governor to sign legislation banning non-compete agreements in New York state, the bill’s sponsor felt they had reached a compromise to alleviate some of her concerns.
State Sen. Sean Ryan, D-Buffalo, said lawmakers were willing to allow the clauses for employees making $250,000 a year or more but the deal fell apart.
“The cap just came down to was it a really a cap or was it [$250,000]? Did it include your base salary or was that insurance and vacation days and bonuses which then brings you well below [$250,000?]” Ryan said.
Non-competes are clauses in employment contracts meant to stop employees from working for or starting with competing companies with outlined geographic and time limits. Ryan said they hurt employees but also stifle the state’s start-up growth.
“We’re spending a lot of money trying to create a high-tech sector but what’s missing from that formula is the fact that we still hold workers to non-competes,” he said.
Tully Rinckey employment attorney Jared Cook said non-competes are one type of tactic businesses use to protect things like intellectual property and trade secrets.
“The idea was that by creating this monetary threshold, salary threshold, they were still permitting these agreements to be used for those high-level positions where those legitimate business interests are more likely to reside,” Cook said.
He said because sides were already close to a compromise, he would advise clients to look at the agreements they are currently using with an expectation the law may soon change.
“I think the writing’s on the wall and I think the most likely outcome is that these are going to be not enforceable for most workers,” Cook said.
Ryan said he will introduce a new bill which will again include a public hearing process.
“We really hope that the business community that weighed in privately, we would like to see them come in publicly and talk about their concerns,” he said.