Noncompete clauses in employment and severance agreements violate the National Labor Relations Act except in limited circumstances, according to a memo released Tuesday by the general counsel for the National Labor Relations Board. However, the US Chamber of Commerce has already come out against the idea. The memo follows a separate effort by the Federal Trade Commission to prohibit noncompetes overall, which has been met with concern by some in the staffing industry.
The NLRB general counsel’s memo this week said noncompetes can interfere with Section 7 protections that allow employees to organize, join unions and collectively bargain.
“Noncompete provisions reasonably tend to chill employees in the exercise of Section 7 rights when the provisions could reasonably be construed by employees to deny them the ability to quit or change jobs by cutting off their access to other employment opportunities that they are qualified for based on their experience, aptitudes and preferences as to type and location of work,” NLRB General Counsel Jennifer Abruzzo write in the memo.
“This denial of access to employment opportunities interferes with workers engaging in Section 7 activity in a number of ways,” Abruzzo continued. “For example, workers know that they will have greater difficulty replacing their lost income if they are discharged for exercising their statutory rights to organize and act together to improve working conditions; their bargaining power is undermined in the context...
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