A similar proposal in New York that was recently vetoed by Gov. Kathy Hochul could forecast a similar fate for the FTC proposal, according to the report.
The New York bill, which was similar to the FTC’s proposal, would have prohibited employers from seeking, requiring, demanding or accepting noncompete agreements from virtually any New Yorker.
New York’s bill “could be viewed as a canary in the coal mine of sorts, a prognostication of the political appetite for a nationwide blanket noncompete ban like the one proposed by the FTC,” the law firm wrote.
Ms. Hochul vetoed the bill, saying she supported banning noncompete agreements for low and middle-income workers. She criticized the full ban’s inflexible approach that did not include an income cap and lacked exception for the sale of a business. Conversely, the FTC’s noncompete rule, as currently drafted, has an exception for the sale of a business where a person subject to a noncompete has an ownership interest of at least 25%.
“The fate of New York’s noncompete ambitions marks an inauspicious start to the FTC’s 2024 plans to rein in noncompetes,” the report said, adding that the proposal also faces a potential judicial review by a Supreme Court “that is increasingly hostile toward the so-called administrative state.”
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