However, employers often rely on noncompete agreements as part of a layered approach to the protection of proprietary information because noncompete agreements (where permitted under state law) can provide protection beyond an NDA. Although the Memo suggests that noncompete agreements would almost always violate Section 7 of the Act, it allows that employers’ legitimate interest in protecting proprietary or trade secret information could be addressed by narrowly tailored workplace agreements that protect those interests, like nondisclosure agreements (NDAs). Other states (e.g., Massachusetts) have enacted laws curtailing the enforceability of noncompete agreements. Some states (e.g., California and Oklahoma) have broad bans on the enforcement of employee noncompete agreements and are contemplating further ways to prohibit their use. Under most existing state laws, noncompete agreements are enforceable if they are narrowly tailored to support a legitimate business interest of the employer, such as the protection of confidential business information or goodwill, and are reasonable in time and geographic scope. The Memo directs NLRB regional offices to submit to the NLRB Division of Advice cases involving “non-compete provisions that are arguably unlawful.” It further directs NLRB regions to “seek make-whole relief for employees who, because of their employer’s unlawful maintenance of an overbroad non-compete provision, can demonstrate that they lost opportunities for other employment.” seeking employment to specifically engage in protected activity with other workers at an employer’s workplace.soliciting their co-workers to go work for a local competitor as part of a broader course of protected concerted activity and.concertedly seeking or accepting employment with a local competitor to obtain better working conditions.carrying out concerted threats to resign or otherwise concertedly resigning to secure improved working conditions.concertedly threatening to resign to demand better working conditions.The Memo expresses the GC’s opinion that noncompete agreements have a chilling impact on Section 7 rights when the noncompete 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 based on their experience, aptitudes, and preferences as to type and location of work.” Specifically, the Memo states that noncompete provisions could “chill employees from engaging in five specific types of activity protected under Section 7”: The NLRB GC’s action is separate from and in addition to the Federal Trade Commission’s proposed rulemaking earlier this year that seeks to ban all noncompete agreements except in the sale of business context. While the Memo is not binding law (which would need to come from the NLRB through rulemaking or caselaw), it signals the agency’s willingness to challenge noncompete agreements through the unfair labor practice charge process. Section 8(a)(1) makes it an unfair labor practice for an employer to interfere with employees’ rights to engage in concerted activities provided in Section 7 of the Act. The GC published a memorandum (the Memo) in which she expressed her opinion that “the proffer, maintenance, and enforcement of such agreements violate Section 8(a)(1)” of the National Labor Relations Act (the Act). On May 30, 2023, the General Counsel (GC) of the National Labor Relations Board (NLRB) took a step toward the federal regulation of employee noncompetition agreements.
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