It isn’t often that an employer is required to keep paying workers who’ve left the company. But it’s one approach to restricting employee noncompete agreements that is up for consideration and facing stiff business opposition in the New Jersey legislature.
Continuing pay for former employees who are bound by noncompetes—a policy sometimes called “garden leave"—is a derivative of a common employment practice in the UK, and conditions could be right for the idea to expand in the US. Offering post-employment pay can have benefits not just for the workers but also for businesses, even if they’re loath to have it legally mandated, according to employment lawyers.
High on the list of benefits: paying a former worker during the noncompete period makes it much less likely a court would side with the worker if they challenge the noncompete as legally invalid. Noncompetes often remain in effect for one to two years after employment ends.
“The payment of money unquestionably makes it easier to enforce a noncompete,” said Russell Beck, an employment lawyer with Beck Reed Riden LLP in Boston.
As scrutiny of employee noncompete agreements spreads among state legislatures and courts, Beck said he’s seen a small uptick in companies opting to include garden leave in their agreements without a legal mandate for it, particularly in the financial services industry.
Garden leave also is sometimes...
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