Last Tuesday, May 30, 2023, National Labor Relations Board (“NLRB”) General Counsel Jennifer Abruzzo issued Memorandum GC 23-08 (the “Memorandum”) on non-compete agreements. According to Abruzzo, non-compete agreements, in general, violate the National Labor Relations Act (“NLRA”). In addition, Abruzzo sets forth her view that the proffer, maintenance, and enforcement of employee non-compete agreements are unlawful under the NLRA.
The Right to Unionize Under the NLRA
Section 7 of the NLRA provides employees with the “right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” An employer violates this section of the NLRA if it interferes with, restrains, or coerces employees in the exercise of Section 7 rights.
What is the Effect of Non-Competes?
According to Abruzzo, non-compete agreements generally tend to “chill” employees from exercising their Section 7 rights. For instance, Abruzzo points out that non-competes restrict employees from engaging in the following types of protected activity:
- Carrying out concerted threats to resign or otherwise concertedly resigning to secure improved working conditions;
- Concertedly seeking or accepting employment with a local competitor to obtain better working conditions;
- Soliciting their co-workers to go work for a local competitor as part of a broader course of protected concerted activity; and
- Seeking employment, at least in part, to specifically engage in protected activity with other workers at an employer’s workplace.
Takeaways for Employers
Abruzzo’s Memorandum follows the Federal Trade Commission’s (“FTC”) recent proposal to ban non-compete agreements. As of now, neither Abruzzo’s Memorandum nor the FTC’s proposal are legally binding. However, employers should begin to review agreements that contain potentially restrictive non-compete provisions and monitor legal developments.
MNK Law will continue to monitor developments with respect to the legality of non-compete agreements. For more information on non-compete agreements, please contact us at info@mnklawyers.com.
This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.
