Several months ago the New York State Legislature passed laws banning the enforceability of non-compete clauses in New York and providing for certain disclosures regarding the beneficial owners of New York LLCs. Given the Byzantine nature of the New York legislative process, Governor Hochul was not required to act on these proposed statutes until December and she did so over the weekend, as follows:

1.      Non-compete law is vetoed. The Governor vetoed the proposed law banning non-competes. The proposed law was extremely broad, and Governor Hochul had previously expressed her real concern was that non-compete clauses should not be able to be imposed on “lower paid” employees. There had been some discussion between the Governor and the legislature regarding setting an annual salary floor above which non-compete clauses could be enforced against employees, say in the $250,000-$300,000 range, but in the final analysis the parties could not agree and the Governor vetoed the bill. It is expected that a new bill may be considered in the 2024 session of the legislature.

2.      LLC transparency law approved with modifications. Unlike its Federal counterpart, the Corporate Transparency Act, which becomes effective January 1, 2024, the proposed New York law would make the LLC beneficial ownership information part of a database which could be accessed by any member of the public. The Governor signed a modification to the law which would limit such access only to law enforcement agencies, which amendment now has to be approved by the legislature as well. It is also expected that the New York law will have a one-year delayed effective date if and when approved.

We also want to remind clients that the Federal Corporate Transparency Act has a one-year grace period with respect to entities created prior to January 1, 2024, i.e. such entities must make their initial CTA filings at any time prior to January 1, 2025. (Entities created in 2024 will have 90 days after formation to file.) We are in the process of investigating service companies being established to assist clients with respect to such filings so please contact the firm if you require such a referral. Remember there are both civil and criminal penalties for noncompliance with the filing requirements.

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Please contact Joshua S. Levine, Esq., of the firm with any questions you may have at jlevine@dmlawyers.com or (914) 948-1556.