Labor, Employment and Employee Benefits
Legal Update
NLRB General Counsel Expresses Views on Non-Competes Violating the NLRA
On May 30, 2023, NLRB General Counsel, Jennifer Abruzzo, sent a memo to all Regional Directors, Officers-in-Charge, and Resident Officers, expressing her view that “the proffer, maintenance, and enforcement” of non-compete provisions in private employer employment contracts and severance agreements violate Section 8(a)(1) of the National Labor Relations Act, except in limited circumstances.

General Counsel Abruzzo reasoned that a provision in an employment agreement violates Section 8(a)(1) if it “reasonably tends to chill employees in the exercise of Section 7 rights unless it is narrowly tailored to address special circumstances justifying the infringement on employee rights.” She further stated that non-compete provisions reasonably tend to chill employees’ exercise of Section 7 rights anytime the provision could reasonably be construed to deny them the ability to quit or change jobs by cutting off their access to other employment opportunities.

General Counsel Abruzzo argued these types of overbroad non-compete provisions chill employees from engaging in five specific types of activity protected under Section 7:

  1. They chill employees from concertedly threatening to resign to demand better working conditions;
  2. They chill employees from carrying out concerted threats to resign or otherwise concertedly resigning to secure improved working conditions;
  3. They chill employees from concertedly seeking or accepting employment with a local competitor to obtain better working conditions;
  4. They chill employees from soliciting their co-workers to go work for a local competitor as part of a broader course of protected activity; and
  5. They chill employees from seeking employment, at least in part, to specifically engage in protected activity with other workers at an employer’s workplace.

However, not all non-competes violate the NLRA. For example, non-competes where the employee could not reasonably construe the agreement to prohibit their acceptance of employment, including provisions that only restrict employees’ managerial or ownership interest in a competing business or agreements that restrict independent contractor relationships. Further, there may be other circumstances where a “narrowly tailored non-compete agreement’s infringement on employee rights is justified by special circumstances.”

Although the NLRB has not officially ruled on General Counsel Abruzzo’s arguments, this is one of many efforts to limit the use of non-compete agreements for employees protected by Section 7. In addition, the FTC proposed a new rule which would ban the use of non-compete agreements by employers.

We will continue to monitor developments in this area and will provide updates as necessary. However, at this point in time, there is no binding authority that would prevent an employer in Massachusetts from requiring that an employee sign a non-compete agreement, provided all the statutory requirements as set forth by statute and controlling case law are met. Our team is available to assist you in drafting such non-compete agreements.

Please contact a member of our Labor, Employment and Employee Benefits Group if you have any questions about enforceable non-compete provisions.
This client alert is intended to inform you of developments in the law and to provide information of general interest. It is not intended to constitute legal advice regarding a client's specific legal issues and should not be relied upon as such. This client alert may be considered advertising under the rules of the Massachusetts Supreme Judicial Court. This client alert is for informational purposes only. It is not intended to be a solicitation or offer to provide products or service to any individual or entity, including to a "data subject" as that term is defined by the European Union General Data Protection Regulations. ©2023 Mirick, O'Connell, DeMallie & Lougee, LLP. All Rights Reserved.