The General Counsel of the National Labor Relations Board ("NLRB") issued Memorandum GC 25-01 on October 7, 2024, which establishes her intent to "urge the Board not only to find certain non-compete provisions unlawful, but also, as fully as possible to remedy the harmful effects on employees when employers use and apply them."
The General Counsel has proposed a 60-day period, starting from the issuance of the October 7 Memorandum, for employers to address and rectify any existing "stay-or-pay" provisions that may not align with legitimate business interests. This directive necessitates that employers quickly evaluate their current provisions in light of the new guidelines, as many restrictive covenants and "stay-or-pay" clauses are likely to violate Section 7, according to the General Counsel's criteria.
The October 7 Memorandum takes aim at restrictive covenants and what the General Counsel identified as "stay-or-pay" provisions. With regard to both restrictive covenants and "stay-or-pay" provisions, the General Counsel believes that inappropriate use of these contractual devices intrudes upon employees’ Section 7 rights to engage in protected activity for mutual aid and protection.
The October 7 Memorandum follows the General Counsel’s May 30, 2023 Memorandum, which established her position that, except in limited circumstances, the proffer, maintenance, or enforcement of non-compete provisions violates the...
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