September 23, 2023

Volume XIII, Number 266


September 22, 2023

Subscribe to Latest Legal News and Analysis

September 21, 2023

Subscribe to Latest Legal News and Analysis

September 20, 2023

Subscribe to Latest Legal News and Analysis

No Limits: Non-Compete Agreements Next Up on NLRB General Counsel Chopping Block

Following the National Labor Relations Board’s (“NLRB”) highly-controversial decision in McLaren Macomb declaring most confidentiality and non-disparagement clauses in separation agreements to be unlawful, General Counsel Abruzzo this week declared her intention to seek to invalidate nearly all post-employment non-compete agreements, in a memorandum stating her prosecutorial position that “the proffer, maintenance, and enforcement” of non-compete agreements violates the Act.

The General Counsel argues that, with extremely limited exception, any agreement that limits future employment interferes with Section 7 rights under the National Labor Relations Act.  She argues that these clauses improperly deny employees the ability to quit or change jobs by cutting off their access to alternative employment opportunities.  As a result, this prevents employees from:

  • concertedly threatening to resign to demand better working conditions;
  • 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 co-workers to 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.

The only identified exceptions to this rule, in the General Counsel’s opinion, are agreements that relate to limiting individuals’ managerial or ownership interests in a competing business, or agreements that restrict independent-contractor relationships (neither of which involve future “employment”).  The memo states that there may be other circumstances in which a narrowly tailored non-compete agreement’s infringement on employees’ rights is justified, but did not elaborate on what those circumstances may be.

Key Takeaways

  • The NLRB has not yet ruled on the General Counsel’s theory. But, given this very public announcement, employers relying on non-compete agreements can expect a slew of unfair labor practices challenging the agreements.
  • Since the Board only has jurisdiction over “employees” as defined by the Act, this memo has no impact on non-compete agreements for managers and supervisors who are excluded from the scope of Section 7.  But, importantly, this memo affects employment relationships with union and non-union employees.
  • This is just one of many efforts to limit the use of non-compete agreements. For example, some states already restrict or prohibit the provision of non-compete agreements to low-wage and middle-wage workers, and just a few months ago, we saw the reintroduction of the Workforce Mobility Act, that seeks to prohibit the use and enforcement of post-employment non-competition agreements.  Further, at the beginning of the year, the FTC proposed an expansive new rule which would impose a near-complete ban on the use of non-compete agreements by employers.

© 2023 Proskauer Rose LLP. National Law Review, Volume XIII, Number 151

About this Author

Michael J Lebowich, Labor, Employment, Attorney, Proskauer, Law Firm

Michael Lebowich is a Partner in the Labor & Employment Law Department and co-head of the Labor-Management Relations Group. He represents and counsels employers on a wide range of labor and employment matters, with a particular interest in the field of traditional labor law.

Michael acts as the primary spokesperson in collective bargaining negotiations, regularly handles grievance arbitrations, assists clients in the labor implications of corporate transactions, and counsels clients on union organizing issues, strike preparation and day-to-day contract administration issues. He...

Mark Theodore, Employment Attorney, Proskauer Rose

Mark Theodore is a partner in the Labor & Employment Law Department. He has devoted his practice almost exclusively to representing management in all aspects of traditional labor law matters throughout the U.S. 

Some highlights of his career include:

  • Successfully negotiated the first contract for a shipping agency during constant threat by union to shut down Port of Los Angeles

  • Successfully defended a major theme park when the NLRB sought bargaining order after the...

Steven Porzio Labor & Employment Attorney Proskauer Rose New York, NY

Steven J. Porzio is a partner in the Labor & Employment Law Department and a member of the Labor-Management Relations Group. Steve assists both unionized and union-free clients with a full range of labor and employee relations matters. He represents employers in contract negotiations, arbitrations, and representation and unfair labor practice cases before the National Labor Relations Board. 

Steve has experience conducting vulnerability assessments and providing management training in union and litigation avoidance, leave management, wage and hour, and hiring and firing...

Joshua Fox Labor & Employment Attorney Proskauer Rose

Joshua Fox is an associate in the Labor & Employment Law Department and a member of the Labor-Management Relations Group. He represents a diverse range of clients, including professional sports leagues and teams, hotels, hospitals, and pipe line contractors, among many others, in collective bargaining, administration of their collective bargaining agreements, arbitrations and matters before the National Labor Relations Board.

In particular, Josh has extensive experience representing professional sports leagues, including Major League...

Elizabeth A. Dailey Labor & Employment Proskauer Rose New York, NY

Elizabeth Dailey is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Group.

Related Practices

  • Labor & Employment
  • Employment Litigation & Arbitration