We previously reported that the National Labor Relations Board (NLRB or the Board) General Counsel Jennifer Abruzzo issued a memorandum in May 2023 advancing the position that non-compete agreements between employers and employees that limit employees from accepting certain jobs at the end of their employment, interfere with employees’ rights under Section 7 of the National Labor Relations Act (the Act). On October 7, 2024, the General Counsel issued another memorandum that expands her position on non-compete agreements by stating her opposition to certain repayment arrangements often included in sign-on bonus and retention bonus programs and policies to reimburse for relocation costs, training and education courses, that are commonly referred to as “stay-or-pay” provisions.
The General Counsel’s memorandum does not represent a statement of the current law nor does it establish new law. Rather, it is the latest effort by the General Counsel, in her advocacy role, to try to reinterpret the NLRA, which, in this case, may serve to restrict employers’ actions to protect their legitimate interests.
New Potential Penalties for Unlawful Non-Compete Agreements
The General Counsel’s May 2023 memorandum stated her position that most non-compete agreements violate employees’ Section 7 rights. General Counsel Abruzzo’s rationale for this position is that non-compete agreements may deter employees from resigning or threatening to resign in protest of working conditions. In the October...
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