June 1, 2023
In a memo released May 30, National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo announced her opinion 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.
The memo proclaims that overbroad noncompete agreements are unlawful because they chill employees from exercising their rights under Section 7 of the NLRA, which protects employees’ rights to take collective action to improve their working conditions.
Specifically, Ms. Abruzzo believes that these agreements 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.
- Seek employment, at least in part, to specifically engage in protected activity, including union organizing, with other workers at an employer’s workplace.
Practical Impact of Memo
As with all general counsel memoranda, Ms. Abruzzo’s memo is not a statement or ruling of the law. The general counsel does not make law, rather she prosecutes the NLRA, and the National Labor Relations Board makes the law. Her legal position would only become law if the NLRB issued a decision or an administrative rule that agreed with the general counsel’s position.
However, since the general counsel sets the stage for regional offices to file complaints against companies, a case will very likely be heading to an administrative law judge and later the NLRB itself. Thus, an employer that uses noncompete agreements faces the prospect of an unfair labor practice charge and subsequent complaint from the NLRB’s regional offices. Consequently, as when the Federal Trade Commission recently proposed barring nearly all noncompetes, employers should consider eliminating the use of noncompetes, particularly with non-management/non-supervisory employees with little to no access to proprietary or trade secrets.
If you have any questions about this or any other employment law matter, please contact Dean Leazenby or any of the other attorneys at Warrick & Boyn, LLP.