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Do noncompete agreements violate the national labor relations act?

On Behalf of | Jun 26, 2023 | Non-compete Agreements

Noncompete agreements often appear as part of employment contracts. These provisions typically prevent you from working in a similar profession or industry for a specified period after leaving your current employer. This can restrict your mobility within your field, and many question whether this violates the National Labor Relations Act.

The government established the NLRA to safeguard the rights of workers and their ability to engage in collective bargaining. Noncompete agreements may infringe upon these rights, sparking a strong debate.

Noncompete agreements and the NLRA

On May 30, 2023, a memo issued by Jennifer Abruzzo, General Counsel for the National Labor Relations Board, declared that noncompete agreements violate the NLRA. The memo stated that such agreements unlawfully impede employees from exercising their rights under Section 7 of the NLRA. Section 7 of the NLRA protects employees’ rights to engage in collective activities, such as working together to improve working conditions.

The memo further explains that overbroad noncompete agreements, which apply unduly strict limitations on employees’ post-employment activities, undermine these rights. They can hamper employees’ abilities to seek better working conditions, consider employment with a local competitor or even plan collective resignations for improved conditions.

Implications for employees and employers

The implications of this memo are substantial for both employees and employers. If an employer uses noncompete agreements, they could face unfair labor practice charges, as the NLRA may consider these agreements violations. This could result in litigation and subsequent complaints from the NLRB’s regional offices.

However, it is important to note that the memo does not say that all noncompete agreements violate the NLRA. The focus is primarily on overbroad agreements. The NLRA might not consider more narrowly tailored agreements that protect legitimate business interests, such as proprietary or trade secrets, in violation. Additionally, the memo does not impact noncompete agreements for managerial or supervisory staff, as the NLRA is only applicable to nonmanagerial, nonsupervisory employees.

As you navigate your career path, it is essential to understand noncompete agreements and your rights under the NLRA.