NLRB General Counsel Asserts Non-Competition Agreements Violate the NLRA
June 05, 2023
The National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo has issued another controversial memo asserting that overbroad non-compete agreements violate the National Labor Relations Act (NLRA). The memo contends that these agreements can weaken employees’ leverage and bargaining power by limiting access to other employment.
Abruzzo’s memo focuses on non-compete agreements that are “overbroad” and “unconscionable.” An overbroad non-compete agreement is one that restricts an employee’s ability to work in a particular industry or geographic area for an unreasonable period of time. An unconscionable non-compete agreement is one that is so one-sided that it is unfair to the employee.
The memo argues that overbroad and unconscionable non-compete agreements violate the NLRA by discouraging employees from exercising their right to organize and bargain collectively. When employees are subject to non-compete agreements, they may be less likely to speak out about workplace concerns or to join a union, for fear of losing their jobs. She asserts that it can make it more difficult for employees to improve their working conditions.
The memo also argues that non-compete agreements can harm competition by preventing employees from moving to other companies and sharing their knowledge and skills, leading to higher prices for consumers and lower wages for workers.
Importantly, General Counsel memoranda are not law and the NLRB has not yet ruled on whether non-compete agreements violate the NLRA. However, Abruzzo’s memo is a significant development in the law, and it is likely to have a major impact on the use of non-compete agreements in the workplace.
What does this mean for employers?
Employers should be aware that the NLRB is continuing to a take more aggressive stance on both severance and non-compete agreements. If you are considering requiring your employees to sign either a severance or non-compete agreement, you should carefully consider the scope of the agreement and make sure that it is not overbroad or unconscionable. You should consult with your employment counsel to ensure that any agreements comply with the law.
To review the NLRB General Counsel Memo, click here.
For more information, please contact Christopher Scott at 717.237.7111 or cscott@tthlaw.com.