The National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo issued a memo to board regional directors doubling down on her position that overbroad noncompete agreements are unlawful and asserting that certain “stay-or-pay” provisions violate employees’ rights under the National Labor Relations Act (NLRA).
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Under stay-or-pay provisions, an employee must pay their employer if they separate from work, Abruzzo explained. Such provisions “infringe on employees’ Section 7 rights in many of the same ways that noncompete agreements do,” she wrote.
Section 7 of the NLRA guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” as well as the right “to refrain from any or all such activities.”
Abruzzo stated in her memo that noncompete provisions “can restrict the ability to change jobs or leverage one’s outside options to obtain a raise, which are common ways employees improve their income and employment terms. In other words, unlawful noncompete provisions may have a harmful financial impact on employee wages and benefits by explicitly restricting employees’ job opportunities.”
As for stay-or-pay provisions, Abruzzo wrote that they—like...
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