Employers seeking to protect their business interests through non-competes scored another win recently. Permobil, Inc., a manufacturer of wheelchairs and wheelchair accessories, faced claims that it violated the National Labor Relations Act (NLRA) with an overly restrictive employment agreement.
The claim arose after Permobil sued Mark Westphal for violating the non-compete provision of his employment agreement. The provision barred former employees from working for competitors in the United States for one year. In addition, the employment agreement stated that workers cannot disclose confidential or proprietary information or disparage the company and its products.
National Labor Relations Board General Counsel Jennifer Abruzzo brought the matter before the NLRB, contending that a non-compete violated an employee's Section 7 rights under the NLRA by preventing the employee from voluntarily quitting to force their employer to meet their demands.
Administrative Law Judge Robert Giannasi conceded that there was no current board precedent that makes non-competes unlawful despite Abruzzo's Oct. 7, 2024, memo asserting her intention to request the NLRB to change the law. Determining such a change was “up to the Board, not me,” Giannasi held that the business reasons stated in the agreement were enough to protect its legality.
Based on current law, he found the non-compete did not violate the employee's Section 7 rights. In particular, he found, “Any Section 7 rights affected...
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