Erik W. Weibust and Erin E. Schaefer, attorneys in the Litigation & Business Disputes and Employment, Labor & Workforce Management practices, co-authored an article in the Employee Benefits Plan Review, titled “An ‘Overbroad’ Noncompete: The National Labor Relations Board Has Found Its First Target.”
Following is an excerpt:
The National Labor Relations Board (NLRB) has found its first target under recent guidance issued in a memo from its general counsel claiming that noncompete agreements may violate the National Labor Relations Act (NLRA). According to Bloomberg Law, “[t]he NLRB’s first enforcement action against an employer’s noncompete agreement targeted a Michigan cannabis processor and ended with a recent private settlement resolving the alleged labor law violations.” (The enforcement action predates the guidance memo.) Bloomberg obtained redacted documents from the case via a Freedom of Information Act request.
On May 31, 2023, the NLRB’s top lawyer, Jennifer Abruzzo, issued a general counsel memo instructing the NLRB’s regional directors of her position that noncompete clauses for employees protected by the NLRA (i.e., nonmanagerial and nonsupervisory employees) in employment contracts and severance agreements violate federal labor law except in limited circumstances.
The memo, while not law, outlines her legal theory that she will present to the NLRB, which makes law primarily through adjudication of unfair labor practice cases. The memo provides guidance to the agency’s field offices of the position that the general counsel is instructing them to take when investigating unfair labor practice charges, claiming that such clauses interfere with employees’ rights under the NLRA.