On Monday, October 7, National Labor Relations Board General Counsel (GC) issued GC Memorandum 25-01, which details the agency’s intent to seek “make-whole” remedies for provisions viewed as unlawful under the National Labor Relations Act (NLRA). While the GC already declared a plan to curb certain noncompete agreements in a May 2023 memorandum, GC 25-01 extends the analysis to “stay-or-pay” provisions, which the GC asserts must be “narrowly tailored” to minimize their infringement on employees’ Section 7 rights.

“Stay-or-pay” provisions refer to those that require an employee to pay the employer if the employee separates from employment within a certain timeframe. They include various types of cash payments that are tied to a mandatory stay period, such as training repayment agreement provisions (TRAPs), educational repayment contracts, quit fees, damages clauses, and sign-on bonuses. According to GC Abruzzo, stay-or-pay provisions, like noncompete agreements, restrict employee mobility by increasing employee fear of termination for engaging in protected Section 7 activity and making resigning from employment financially difficult or untenable. As such, the GC argues these provisions should be considered presumptively unlawful unless an employer can demonstrate the following under a new burden-shifting framework:

The agreement…

• Is voluntarily entered into in exchange for a benefit, meaning accepting the provision must be optional and employees must not suffer an undue...

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