Employers following the Federal Trade Commission’s (“FTC”) rulemaking process that will restrict non-compete agreements in many employment relationships may be relieved to learn that the FTC is not expected to vote on its proposed rule to ban such agreements until April 2024, according to Bloomberg Law, following receipt of over 27,000 comments from the public.
However, employers should consider taking immediate action to reexamine their use of any non-compete agreements with employees and former employees following the May 30, 2023, National Labor Relations Board (NLRB) announcement that non-compete agreements violate the National Labor Relations Act (NLRA).
NLRB General Counsel Jennifer Abruzzo opined that most employment non-compete agreements violate the NLRA, impacting both unionized and non-unionized workers. The memo argues that non-competes hinder employees from exercising their rights under Section 7 of the NLRA, which protects their ability to engage in concerted activities to improve working conditions. This position has significant implications for both unionized and nonunionized employers, potentially leading to unfair labor practice charges for employers that utilize non-competes as a condition of employment, continuing employment, or severance payments.
Ms. Abruzzo highlights several ways in which she asserts non-compete agreements interfere with employees' rights, including restricting their ability to threaten to resign, seek employment with competitors,...
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