NLRB General Counsel Takes Aim at Non-Competition Agreements
The General Counsel of the National Labor Relations Board (“NLRB”) set her sights on a new target with the latest memorandum: non-competition agreements. The memorandum, while not binding, lays out the General Counsel’s belief that the proffer, maintenance, and enforcement of agreements containing provisions prohibiting employees from competing with their former employer are unlawful because they have a tendency to chill employees’ rights under Section 7 of the National Labor Relations Act, which protects employees’ right to organize. Indeed, General Counsel Abruzzo states that “retaining employees or protecting special investments in training employees are unlikely to ever justify an overbroad non-compete provision.”
Specifically, General Counsel Abruzzo provides that a non-compete provision in an employment or severance agreement is unlawful “when the provisions could reasonably be construed by employees to deny them the ability to quit or change jobs by cutting off their access to other employment opportunities that they are qualified for based on their experience, aptitudes, and preferences as to type and location of work.” These provisions, General Counsel Abruzzo believes, interfere with employees’ ability to:
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Concertedly threaten to resign to secure better working conditions;
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Carry out concerted threats to resign or otherwise concertedly resign to secure improved working conditions;
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Concertedly seek or accept employment with a local competitor to obtain better working conditions;
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Solicit their co-workers to go work for a local competitor as part of a broader course of protected concerted activity;
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Seek employment, at least in part, to specifically engage in protected activity, including union organizing, with other workers at an employer’s workplace.
The memorandum notes that non-compete provisions that only restrict an individual’s managerial or ownership interest in a competitor could be lawful. Furthermore, it is important to note while the National Labor Relations Act applies to all workforces, including non-union workforces, it does not apply to statutory supervisors or managers.
