Did the Working for Workers Act work? The need to better understand the prevalence, use and impact of non-competes in Canada

Abstract

Based on available survey data, millions of Canadian workers likely have employment contracts with unenforceable non-compete clauses. US studies have found that these clauses can discourage labour mobility, suppress wages, and impede new business formation and efficient job matching to the detriment of workers and productivity. To understand whether or not these effects are manifesting in Canada, we need empirical studies. This paper recommends a two-phased approach. First, researchers should conduct a high-quality national survey on the use and prevalence of non-competes in Canada. Second, researchers should study the effect of Ontario's legislative ban on non-competes made as part of the Working for Workers Act, 2021. This unique policy shock provides a basis for a robust empirical study of the effects of non-competes in Canada.

Keywords: Non-compete, Restrictive covenants