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What does the NLRB’s new take on non-competes mean for employers?

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Specifically, she claims the denial of access to other employment opportunities interferes with Section 7 activity in a number of ways:

  • Employees’ bargaining power is undermined in the context of work stoppages and other labor disputes
  • Employees cannot threaten resignation knowing that they will have greater difficulty replacing their lost income if they are discharged for exercising their statutory rights
  • Employees cannot solicit their former coworkers to work for a competitor and, thus be able to leverage their prior relationships
  • Employees cannot seek employment for the purpose of engaging in protected activity such as union organizing or “salting”

While seeking to effectively ban nearly all non-competes (particularly for what the memo called “low wages employees”), Abruzzo does acknowledge that not all non-competes are prohibited. In doing so, she notes that lawful non-compete agreements might only occur in extremely narrow circumstances where the contract concerns an individual’s ownership interest in a competitor; true independent contractor relationships; or when “justified by special circumstances.”

However, such special circumstances would not include a desire to avoid competition; interests in retaining employees or investments in training employees; or protecting proprietary or trade secret information, which she claims can be protected by other narrowly tailored workplace agreements such as longevity bonuses or confidentiality agreements.

While memos such as this from the General Counsel are not by themselves law, they signal the enforcement priorities of the Board and how the Board is to approach these issues when such cases arrive before it. For example, Abruzzo previously issued a memo attempting to outlaw captive audience meetings with a similar directive requiring that all cases involving captive audience meetings be submitted to the Division of Advice, to which the Associated Builders and Contractors of Michigan filed a lawsuit in March 2023 asking a federal judge to issue an injunction concerning her efforts.

Given this memo includes a similar instruction that Regional Officers send cases involving non-competes to the Division of Advice, there should be little doubt that her office is looking for cases that might be used to pursue binding Board precedent in this area. Employers should consider this memos or risk becoming one of Abruzzo’s test cases. According to the memo, she “recently” authorized at least one complaint against an employer for their use of an allegedly overly broad non-compete provision.

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