The National Labor Relations Board has issued a memorandum asserting that noncompete agreements generally violate a worker’s right to engage in collective action to improve their working conditions, as protected under the National Labor Relations Act.

The memorandum, promulgated on May 30, 2023, falls in line with other state and federal actions intended to curb the use of noncompetes.

Rationale of the memo

In the memo, NLRB General Counsel Jennifer Abruzzo suggests that noncompete agreements may chill employees from exercising their Section 7 rights to take collective action. Per Abruzzo, “[T]he provisions could reasonably be construed by employees to deny them the ability to quit or change jobs by cutting off their access to other employment opportunities that they are qualified for.”

Specifically, noncompete provisions may interfere with employees’ ability to:

• Concertedly threaten to resign to demand better working conditions.
• Concertedly seek or accept employment with a local competitor to obtain better working conditions.
• Solicit coworkers to go work for a local competitor, as part of a broader course of protected concerted activity, and
• Seek employment with other workers.

Signal for the future

While the memorandum is not legally binding, it’s a clear signal as to how the NLRB General Counsel plans to pursue future cases. Abruzzo has encouraged the NLRB regional offices to advance cases that run counter to guidance in the memorandum. Once such a case is decided by...

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