After I heard this, I did a search, and apparently, it is legal in Que. (where this is) and in the rest of Canada too, however, there are certain conditions, and from what I read, courts are not overly eager to enforce them, either.

In my Google search, I found examples of daycares in the States where they do this but until yesterday, I had only ever heard the term "non-compete" on t.v.