Open Markets Institute Submits Written Testimony to New Jersey State Legislature

Open Markets Institute Legal Director Sandeep Vaheesan this week submitted written testimony urging the New Jersey State Legislature to enact a full ban on non-compete clauses and similarly restrictive practices.“Senate No. 1410 is an important step in the right direction,”Vaheesan writes.“Non-competes and functionally similar contracts reduce labor market mobility and generally depress wages, wage growth, and small business formation. Research has found that non-competes discourage workers from leaving their jobs, even when employers cannot legally enforce the contracts in court.”New JerseySenate bill No. 1410would prohibit non-compete clauses for nine classes of enumerated workers, including nonexempt workers under the Fair Labor Standards Act, low-wage workers, and independent contractors. The bill also restricts the use of non-compete clauses for the rest of the work force, notably limiting their temporal duration to no more than 12 months and requiring employers to pay a worker’s full salary and other compensation when a non-compete is in effect (commonly called“garden leave”). These restrictions and conditions would deter employers from using non-compete clauses as a matter of course, with employers likely using these contractual provisions only when strictly necessary to protect proprietary information. No. 1410 also bans unfair no-poach agreements, including between directly competing employers and staffing companies and their employer-clients, for low-wageworkers.The Open Markets Institute has written extensively on the harms that non-competes and similarly unfair clauses inflict on workers and has advocated for strict legal prohibitions on them.

Read full testimony below or download here.