Ontario government bans non-compete clauses that free workers to change jobs

The Ontario government bans non-compete clauses in employment contracts, a move it says will give workers more freedom to change jobs and will also help tech companies attract U.S. employees.

But critics say the move, announced by Labor Minister Mount McNaughton, is largely symbolic and doesn’t do enough to help workers.

“This is sending the message that the days of using these clauses to intimidate employees are over. It’s about rebalancing the scales, ”McNaughton said in an interview before introducing new legislation to change the Labor Standards Act.

While non-compete clauses were once the exclusive domain of CEOs or owners selling their businesses, they have become much more pervasive, McNaughton said. That reduces worker mobility and makes it difficult for Canadian tech companies to attract highly-skilled employees from other countries, including the United States, McNaughton said.

“These are being used against fast food workers,” McNaughton said. “That is wrong.”

The prohibition of non-competition clauses includes exceptions for owners who sell their businesses and for clauses that include protection of intellectual property.

The change does not apply to federally regulated workers, including those working for airlines, banks or interprovincial railroads. They also don’t apply to workers in the gig economy, such as food delivery app drivers.

Ottawa labor attorney Wassim Garzouzi acknowledged that the change is helpful to workers at first glance, but says the courts have already ruled in several cases that the vast majority of non-compete clauses are invalid.

“Everyone agrees that these things are not good for workers. But when it comes to things that would improve workers’ rights, this wasn’t exactly at the top of the list, ”said Garzouzi, who works at Ottawa-based Raven Law and is also president of the Canadian Association of Lawyers. Labor Lawyers.

Garzouzi pointed to the need to bring workers in the gig economy under the protection of the Labor Standards Act, improve severance pay, and institute paid sick days as measures that would help more workers.

“Putting economy workers on demand under ESA would have helped a lot more people than this,” Garzouzi said.

Still, said labor attorney David Ragni, banning non-compete clauses will help many vulnerable workers who may not have fully understood their rights or felt able to defend them.

Many employers, Ragni said, continue to include a non-compete clause in contracts, even though the courts have repeatedly ruled that they are invalid in the vast majority of cases.

“A lot of people are going to sign that contract as is, because they want the job,” said Ragni, who works at Koskie Minsky, a firm that frequently represents unions.

And while non-compete clauses are largely unenforceable, the people who signed contracts that included them simply might not know it, Ragni argued. And that, he said, means workers are less likely to change jobs.

“If you think a non-compete clause applies to you, you will never again tell your employer ‘someone is offering me more money. Will you match it? ‘”Ragni said.

Jerry Dias, president of Unifor, the nation’s largest private sector union, criticized the existence of non-competition clauses and praised the move.

“These things are designed to make sure that workers can’t move on to other jobs. They are horrible. And when a conservative government does something that helps workers, I applaud them, ”said Dias, who suggested, however, that there was an ulterior motive for taking what could be seen as a populist step in favor of the workers.

“There is nothing like being less than a year away from an election to turn a conservative into an angry socialist,” Dias said with a smile. Ontario’s next election must be held by June 2.


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