Chief counsel of NLRB clarifies legalities, suggests alternate solutions for employers

Requiring workers to sign agreements not to join competing companies is against the law, in most cases, according to a National Labor Relations Board (NLRB) official.

“The proffer, maintenance and enforcement of a non-compete provision that reasonably tends to chill employees from engaging in Section 7 activity… violate Section 8(a)(1),” said Jennifer Abruzzo, NLRB chief counsel, in a memo to all regional directors, officers-in-charge and resident officers.

That is unless “the provision is narrowly tailored to special circumstances justifying the infringement on employee rights,” said Abruzzo.

In January, the Federal Trade Commission (FTC) proposed a new rule that would ban employers from imposing non-compete clauses on their employees.

In March, lawyers voiced their concern over the proposal, with one saying it would have a “disastrous effect” on small businesses.

‘They chill employees’

Noncompete agreements create a workplace environment in which employees are hesitant to raise safety concerns for fear of retaliation, said Abruzzo.

She said that: “they chill employees” from:

• concertedly threatening to resign to demand better working conditions
• concertedly resigning to secure improved working conditions
• concertedly seeking or accepting employment with a local competitor to obtain better working conditions
• soliciting their co-workers to go work for a local competitor as part of a...

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