Following the FTC’s Notice of Proposed Rulemaking seeking to ban non-competes earlier this year, another federal agency has joined the attack on non-competes.
On May 30, the NLRB’s General Counsel Jennifer Abruzzo issued a memo to all NLRB regional directors, officers-in-charge and resident officers stating that non-competes in employment agreements and severance agreements violate the National Labor Relations Act except in rare circumstances.
Specifically, Ms. Abruzzo claims that such covenants interfere with workers’ rights under Section 7 of the act, which protects employees’ right to self-organize, join labor organizations, bargain collectively, and “engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Ms. Abruzzo thus concluded that non-competes typically violate Section 8(a)(1) of the act, which makes it an unfair labor practice for an employer to interfere with an employee’s Section 7 rights.
Ms. Abruzzo’s rationale for her determination is similar to the FTC’s: the memo claims (with scant support, we would add) that non-competes “are overbroad,” and can be construed by employees as “deny[ing] them the ability to quit or change jobs by cutting off their access to other employment opportunities that they are qualified for based on their experience, aptitudes, and preferences as to type and location of work.”
While some non-competes used by employers may be overbroad, Ms....
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