(Last Updated On: June 12, 2023)
A recent memo by National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo has sparked renewed discussion about the impact of non-compete agreements on both employees and employers. The memo emphasizes the need for a balanced approach that respects the rights of employees while recognizing legitimate business interests. The Rodman Employment Law team is here to break down the details of the memo and its implications for employers and employees here in Massachusetts.
Evaluation of Non-Compete Agreements under the NLRA
The NLRB General Counsel’s memo highlights the potential violation of the National Labor Relations Act (NLRA) by certain non-compete agreements. The NLRA safeguards employees’ right to engage in concerted activities aimed at collective bargaining or mutual aid and protection. Non-compete agreements that unduly restrict employees from pursuing better job opportunities or participating in collective actions may infringe upon these protected rights.
The memo further notes that non-compete agreements can create an environment where employees feel hesitant to discuss important employment matters, such as wages and benefits. This may undermine the open dialogue necessary for effective collective bargaining. Striking a balance that respects both employees’ rights and legitimate business interests is crucial.
It’s worth noting that in the memo, Abruzzo did allude to an exception for some non-compete agreements. Under certain circumstances, non-compete agreements may be considered legal if they specifically limit individuals’ involvement in managerial or ownership aspects of a competing business, or if they pertain to genuine independent contractor arrangements.
Implications for Employers
Employers are urged to review their existing non-compete agreements, policies, and practices in light of the NLRB General Counsel’s memo. It is always a good idea to revisit existing non-compete agreements to strike a fair balance that addresses concerns about job mobility without undermining business needs. Keep in mind that Massachusetts law on non-competes is stringent, and implementing a carefully defined compliance strategy will best prepare a business for changes at the federal level.
The memo also encourages employers to consider alternative measures that protect their legitimate interests while allowing employees to explore new opportunities. Confidentiality agreements, non-solicitation agreements, and trade secret protection can provide effective safeguards without overly restricting employees’ job mobility. By adopting such measures, employers can foster an environment that respects employee rights and promotes fair competition.
The NLRB General Counsel’s memo offers employees a potential avenue to challenge the enforceability of non-compete agreements that may infringe upon their rights. Employees may have an opportunity to seek better job prospects, negotiate for improved wages, and collectively address workplace concerns. It is essential for employees to be aware of their rights and engage in constructive discussions with employers regarding the use of non-compete agreements.
The NLRB General Counsel’s memo presents an opportunity for employers and employees to engage in a meaningful discourse about non-compete agreements and their impact on labor rights. By adopting a balanced approach that respects both employee rights and legitimate business interests, employers can foster a fair work environment. Similarly, employees can actively exercise their rights while being mindful of the importance of protecting businesses from unfair competition. Together, employers and employees can navigate the complexities surrounding non-compete agreements and work towards mutually beneficial solutions.
Have More Questions About Non-Competes?
Don’t hesitate to reach out to an expert on the Rodman Employment Law team. Whether you’re approaching a non-compete from an employer or employee perspective, we’ll help you stay on the right side of the law. Contact us at 617-820-5250.