The memo’s analysis, if adopted and broadly applied by the NLRB, would upend established legal precedent in the 46 states that permit post-employment non-competition covenants that are appropriately tailored to protect the legitimate business interests of employers. The memo, available here, is the latest in a trend at the state and federal level seeking to limit the use of post-employment non-competition covenants.

Non-Competition Covenants and the National Labor Relations Act

The General Counsel’s memo states that the “proffer, maintenance, and enforcement” of non-competition agreements “reasonably tend to chill” employees exercising their Section 7 rights by making it harder for employees to seek different employment and thus, according to the General Counsel’s theory, discouraging them from engaging in conduct that might put their current employment at risk. These Section 7 rights, according to the memo, include:

1. The right to threaten to resign to demand better working conditions;
2. The right to resign to demand better working conditions;
3. The right to seek or accept employment with a local competitor to obtain better working conditions;
4. The right to solicit co-workers to work for a local competitor as part of a broader course of protected activity; and
5. The right to seek employment in order to engage in protected activity with other workers, such as union organizing, at different workplaces.

Based on this analysis, the memo opines that non-competition agreements will...

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