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.