NLRB General Counsel Doubles Down Non-Competes

Abruzzo Reiterates Previous Guidance on Common Employer Agreements

The National Labor Relations Board (NLRB) has an important role to ensure workers can join unions and engage in concerted activities, such as requesting changes in working conditions. However, during the Biden-Harris administration, the NLRB has sought to expand its mandate through novel interpretations of the law.

For example, on October 7, General Counsel Jennifer Abruzzo issued a memo addressing non-compete agreements and "stay-or-pay" provisions. This builds on her May 2023 guidance, which expressed hostility toward these agreements, viewing them as overly restrictive under the National Labor Relations Act (NLRA).

Abruzzo’s memo emphasizes her intention to prosecute employers who enforce non-compete and stay-or-pay provisions. She argues that non-compete agreements can deter employees from exercising their rights due to fear of repercussions, despite these agreements traditionally being governed by state law and not regulated under the NLRA.

She claims that non-compete agreements can be "self-enforcing," potentially limiting job mobility and suppressing wages, which she views as beyond the NLRB’s mandate, especially if such agreements are voluntary. She advocates that employees should be free to waive their rights to pursue other employment opportunities.

Regarding stay-or-pay provisions, including training or educational repayment agreements and bonuses tied to mandatory stay periods, Abruzzo states these are used by employers to protect their investments in training. However, she argues these provisions can suppress union organizing and other activities by creating financial disincentives for employees to leave. She recommends that employers ensure these provisions are narrowly tailored.

The memo suggests remedies beyond rescinding unlawful provisions, advocating for "make-whole" relief to restore employees to the positions they would have held if the unlawful provisions had not existed.

For employers, Abruzzo’s memo indicates her office will pursue a stringent approach in prosecuting violations, with significant penalties for breaches. Given the activist stance of the current NLRB majority, enforcement actions are increasingly likely.

Sean P. Redmond is Vice President, Labor Policy at the U.S. Chamber of Commerce.