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June 1, 2023 1:30pm

Noncompete Update: Chamber opposes NLRB memo on non competes

This information was originally published by the U.S. Chamber on Thursday, June 1, 2023.

On May 30, the National Labor Relations Board’s (NLRB) General Counsel issued a memo expressing her view that noncompete agreements violate the National Labor Relations Act and are therefore an unlawful employment practice.

What Happens Next:

While the General Counsel has sent the memo to all Regional Directors and field staff, it is not yet official NLRB policy. That said, employers should expect the following:

  1. The General Counsel will look for opportunities to file complaints against employers that use noncompetes. Employers at that point would need to decide if they want to settle those cases or contest them through the NLRB’s adjudicatory process. If the Board has not yet validated the General Counsel’s theory, administrative law judges are unlikely to uphold such a complaint.
  2. The Board itself will need to decide if it wishes to take up the General Counsel’s theory. The General Counsel has already asked the Board to do so in a case called Stericycle.
  3. If the Board does in fact approve this theory and decide to make noncompetes a violation of labor law, it will effectively become national policy.

If the Board rules against an employer in a case involving noncompetes, the employer can appeal that ruling to federal court.

What the Chamber is Doing:

The Chamber immediately issued a statement in opposition, is posting further information on our website, and will look at all options to ensure that the GC’s actions do not stand. This will include communications with the Board, Congressional action, working with any companies that might be targeted, and ultimately, if necessary, litigation.

For more information on the memo, click here.