New York weighs noncompete ban that would cover hospitals

New York Gov. Kathy Hochul is weighing a bill that seeks to prohibit noncompete agreements, which would make New York the fifth state with such a ban if enacted. 

The bill — S.3100A and A.1278B — passed both houses of the state Legislature in June. The legislation would prohibit employers from seeking, requiring, demanding or accepting noncompete agreements from virtually any New Yorker upon enactment of the law. The bill would apply to nonprofit entities, which make up the large majority of health systems and hospitals in the state.

"Promoting stability in healthcare is a major goal of this bill," state Sen. Sean Ryan, who proposed the legislation, said in a statement shared with Becker's Hospital Review. 

"What we've seen is that most doctors who are unhappy at their place of employment will leave whether they have signed a noncompete agreement or not," Mr. Ryan said. "That means that those who are under noncompetes often pack up and leave to practice in a different area, which in turn disrupts the continuity of care for their patients. The prevalence of noncompete agreements in the medical field is driving doctors out of New York and harming their patients." 

The governor has said she plans to address most legislation by the end of 2023, but there is a chance that a decision on the noncompete bill could arrive in February, officials told The Wall Street Journal

Ms. Hochul has proposed possible limitations to the bill, including a compensation threshold in which noncompete agreements are permitted for earners of $250,000 or more in the interest of potentially reducing any incentive for retaining businesses and corporations to leave in the state, the Journal reports. Other states have taken the approach of establishing a pay threshold for noncompete agreements, while four states — California, Minnesota, North Dakota and Oklahoma — have banned the clauses entirely. 

About 1 in 5 American workers — approximately 30 million people — are subject to a noncompete clause, according to figures from the FTC, which is preparing to release a final rule to restrict use of the covenant. The American Hospital Association has expressed opposition to the federal agency's proposed ban on noncompetes, the scope of which left hospitals with questions.  

The New York State Academy of Family Physicians is one healthcare group that has stepped out in support of the legislation in New York. "The disparity in bargaining power between large employers and individual physicians is the foundation upon which inequitable provisions in employment contracts are based," Jose David, MD, former president of the NYS Academy of Family Physicians, said in a news release out of Mr. Ryan's office about the bill. 

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