In a significant development for employers that use restrictive covenant agreements, on February 14, 2025, National Labor Relations Board (NLRB) Acting General Counsel (GC) William B. Cowen rescinded prior NLRB GC memoranda, including two restrictive covenant-related memoranda authored by former general counsel, Jennifer Abruzzo.

Memorandum GC 25-05 specifically rescinds (1) “GC 23-08 Non-Compete Agreements that Violate the National Labor Relations Act” and (2) “GC 25-01 Remedying the Harmful Effects of Non-Compete and “Stay-or-Pay” Provisions that Violate the National Labor Relations Act.” The rescission of the Abruzzo memos is not surprising given the new administration. Yet, it is an important development for employers that use restrictive covenants and/or stay-or-pay agreements with non-supervisory and non-management employees.

Quick Hits

• On February 14, 2025, NLRB Acting GC William B. Cowen rescinded memoranda that deemed as violations of the National Labor Relations Act (NLRA) two categories of restrictive covenant agreements with non-supervisory/non-management employees: (1) non-compete agreements in employment contracts and severance agreements and (2) stay-or-pay agreements whereby employees are required to remain employees for a certain period of time or reimburse an employer certain moneys.
• This action reverses the stance taken by former GC Jennifer Abruzzo, who argued that such agreements interfere with employees’ rights under Section 7 of the NLRA.
• The...

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