Employment / 1 min read
In a memo released May 30, 2023, National Labor Relations Board (“NLRB”) General Counsel Jennifer Abruzzo announced the agency’s position that noncompete agreements violate the National Labor Relations Act (“NLRA”). The announcement, which applies to nonunionized and unionized employers, may result in unfair labor practice charges for any employer that uses noncompetes.
Abruzzo said noncompetes interfere with employees' ability to:
- Concertedly threaten to resign to secure better working conditions;
- Carry out concerted threats to resign or otherwise concertedly resign to secure improved working conditions;
- Concertedly seek or accept employment with a local competitor to obtain better working conditions;
- Solicit their co-workers to go work for a local competitor as part of a broader course of protected concerted activity; and
- Seek employment, at least in part, to specifically engage in protected activity, including union organizing, with other workers at an employer's workplace.
The memo stated further that business interests in retaining employees or protecting special investments in training employees are unlikely to ever justify an overbroad noncompete provision. The NLRB believes that employers' legitimate business interest in protecting proprietary or trade secret information can be addressed by narrowly tailored workplace agreements that protect those interests.
Overbroad non-compete provisions imposed on low-wage or middle-wage workers who lack access to trade secrets are unlikely to be justified, the memo said.
As when the Federal Trade Commission proposed non-competes, employers may consider eliminating the use of noncompetes with low-wage earners, particularly if these workers have no access to proprietary or trade secrets, given the memo's wording.