Attorney Harrison Oldham

On May 30, 2023, General Counsel (GC) Jennifer Abruzzo released Memorandum 23-08, Non-Compete Agreements that Violate the National Labor Relations Act. Abruzzo’s memo called for new legislation by the National Labor Relations Board (NLRB) to declare employee non-compete agreements unlawful under the National Labor Relations Act (the Act). This move follows the Federal Trade Commission’s recent proposal to ban almost all non-compete agreements nationwide.

The goal of the NLRB is to protect employees’ rights to engage in collective bargaining and other concerted activities, which it primarily does through the Act. Section 7 of the Act grants both unionized and non-unionized employees the right to self-organize, form or join labor organizations, engage in collective bargaining, and participate in other concerted activities for mutual aid or protection. Abruzzo argues that non-compete agreements generally “chill” employees in exercising their Section 7 rights and consequently violate Section 8(a)(1) of the Act. An employer violates Section 8(a)(1) of the Act if it interferes with, restrains, or coerces employees in exercising those Section 7 rights.

Specifically, GC Abruzzo identifies five activities protected by Section 7 that non-competes tend to impede:

Concertedly threatening to resign to demand better working conditions.
Engaging in concerted threats to resign or resigning together to secure improved working conditions.
Seeking or accepting employment with a local competitor to obtain better working conditions.
Soliciting co-workers to work for a local competitor as part of protected concerted activity.
Seeking employment, partly for the purpose of engaging in protected activity with other workers at the same employer’s workplace.

While Abruzzo’s stance represents her interpretation of the NLRA, it currently conflicts with existing law. Nevertheless, the General Counsel plays a significant role in shaping labor policy and legal interpretation. They issue memoranda and guidance documents that provide dirtion to the regional offices, administrative judges, and parties involved in labor disputes. Additionally, the GC is responsible for investigating and prosecuting unfair labor practice charges filed with the NLRB. They have the authority to issue complaints against employers and decide which cases to pursue and which cases to dismiss.

For now, neither the FTC’s proposed rule nor Abruzzo’s memorandum requires immediate action from employers. However, employers should review their current restrictive covenant agreements with employment counsel and explore reasonable ways to mitigate potential impacts resulting from these legal developments.

Abruzzo’s memo reflects her continued efforts to implement pro-labor policies aligned with the Biden administration’s goals, which have faced obstacles in legislative processes such as the Protecting the Right to Organize (PRO) Act. The FTC’s proposed non-competence rule was also prompted by an executive order issued in July 2021, calling for restrictions on such agreements.

While the future implications of these developments remain uncertain, employers should stay informed and proactively assess their current practices in light of these potential changes in the legal landscape.

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About Harrison Oldham

Harrison grew up in Mansfield, Texas. He attended Texas A&M University for his bachelor’s degree, where he met his wonderful wife, Kelsey. After graduating magna cum laude from Texas A&M, he attended SMU Dedman School of Law, graduating with honors in 2012. Today, Harrison and his wife live in Dallas, Texas with their son, Teddy.

Since graduating from SMU Law, Harrison has worked exclusively in the field of business law. He has spent time in private practice and in-house, working with clients of every size; from single person startups to Fortune 250 companies. Today his practice focuses on serving the diverse needs of businesses and individuals throughout Texas. You can learn more about Harrison by visiting his website, at: http://lonestarbusinesslaw.com/.

The post NLRB General Counsel Issues Memo Targeting Employee Non-Competes Under NLRA appeared first on Your HelpDesk for HR .