On May 30, 2023, the National Labor Relations Board chief counsel issued a legal opinion banning noncompetition agreements for all employees, with few limited exceptions. All employees must take notice and read the press release below and the link to the legal memorandum issued by the NLRB General Counsel Jennifer Abruzzo. If you are currently under the threat of enforcement of your noncompetition agreement, this is your immediate answer- it’s legally unenforceable!
The NLRB General Counsel legal opinion has the force of law for the following reasons. First, courts give administrative deference to federal agencies because the subject matter, here union collective action and noncompetition agreements, falls within the specialized purview of the federal agency. Second, as the legal opinion states, the General Counsel is requesting the NLRB accept cases whereby noncompetition agreements are used by employers to interfere with employee rights by attempting to use and enforce noncompetition agreements on their current and former employees.
For all employees this is a big deal! Employers who seek to enforce noncompetition agreements should be told by current and former employees that any noncompetition agreement is legally unenforceable because the agreement violates the National Labor Relations Act. Print out a copy of the General Counsel’s memo and hand it to your employer/former employer when they threaten to enforce the sham noncompetition agreement. Send a message via email and attach a copy of the memo. Then wait and see if the employer sends you a cease-and-desist letter; it is highly unlikely they will.
The General Counsel’s memo and the recent FTC proposed rule to ban noncompetition agreements under federal antitrust laws is a pivotal moment in history for all employees. According to the memo, it is now the law of the land or at least the current threat to employer enforcement of these one-sided noncompetition agreements.
An NLRB press release stated:
“NLRB General Counsel Jennifer Abruzzo sent a memo to all Regional Directors, Officers-in-Charge, and Resident Officers, setting forth her view that the proffer, maintenance, and enforcement non-compete provisions in employment contracts and severance agreements violate the National Labor Relations Act except in limited circumstances.
The memo explains that overbroad non-compete agreements are unlawful because they chill employees from exercising their rights under Section 7 of the National Labor Relations Act, which protects employees’ rights to take collective action to improve their working conditions. Specifically, these agreements interfere with employees’ ability to: 1. concertedly threaten to resign to secure better working conditions; 2. carry out concerted threats to resign or otherwise concertedly resign to secure improved working conditions; 3. concertedly seek or accept employment with a local competitor to obtain better working conditions; 4. solicit their co-workers to go work for a local competitor as part of a broader course of protected concerted activity; 5. seek employment, at least in part, to specifically engage in protected activity, including union organizing, with other workers at an employer’s workplace.
“Non-compete provisions reasonably tend to chill employees in the exercise of Section 7 rights when the provisions could reasonably be construed by employees to deny them the ability to quit or change jobs by cutting off their access to other employment opportunities that they are qualified for based on their experience, aptitudes, and preferences as to type and location of work,” said General Counsel Abruzzo. “This denial of access to employment opportunities interferes with workers engaging in Section 7 activity in a number of ways—for example, workers know that they will have greater difficulty replacing their lost income if they are discharged for exercising their statutory rights to organize and act together to improve working conditions; their bargaining power is undermined in the context of lockouts, strikes and other labor disputes; and their social ties and solidarity leading to improvements in working conditions at workplaces are lost as they scatter to the four winds.”
General Counsel Abruzzo explains that in some cases, noncompete agreements could be lawful if the provisions clearly restrict only individuals’ managerial or ownership interests in a competing business, or true independent-contractor relationships. Moreover, there may be circumstances in which a narrowly tailored non-compete agreement’s infringement on employee rights may be justified by special circumstances.”
The NRLA General Counsel memo referenced in a footnote the 13th Amendment to the U.S. Constitution; indicating the severity of the public policy issue noncompetition agreements present: “The undoubted aim of the Thirteenth Amendment …was not merely to end slavery but to maintain a system of completely free and voluntary labor throughout the United States.” Pollock v. Williams, 322 U.S. 4, 17, 64 S. Ct. 792, 799, 88 L. Ed. 1095 (1944). (Emphasis added).
In summary, what is moving the ball here on the final eradication of noncompetition agreements nationwide is the billions of dollars of lost wages that result from employers forcing noncompetition agreements on employees and the anti-union employer sentiment. It also appears the NLRB has a very real fear about current and future violations of the 13th Amendment caused by entrapped and involuntary labor. Employees have never benefited from these one-sided employment agreements and the courts were never the legislative body or administrative agency to properly enforce public policy on this scale. In fact, in my experience, courts are extremely reluctant to enforce noncompete agreements against any employee, especially after the global pandemic we just came out of.
The NLRB has finally set all employees free!
For more information about your noncompetition agreement, please contact Carey & Associates, P.C. at 203-255-4150 or email info@capclaw.com.