noncompete

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On October 7, 2024, the Office of the General Counsel issued a new memorandum, GC 25-01, expanding her prosecutorial agenda to remedy what she sees as the harmful effects of non-compete agreements and so-called “stay-or-pay” provisions that violate the National Labor Relations Act (NLRA).

Last year, General Counsel Abruzzo issued memorandum GC Memo 23-08 stating her position that most non-compete agreements violate the NLRA because they tend to chill the exercise of Section 7 rights. And enforcement efforts against such agreements already underway, in particular a recent complaint issued by the GC. Recently, Region 22 issued a complaint against a building services contractor alleging the use of a no-poach agreement with its building clients violated the NLRA.

Imagine: in a region where hiring and retaining competent employees is becoming increasingly difficult, a multi-national company announces it will build a plant and employ more than 10,000 workers over the next few years. The pressure to get and keep your best employee has just increased, and the ripple effect touches every aspect of this competitive employment situation. Seeking to maintain your competitive position at a time when employees are being wooed to leave, you may want to explore using noncompetition and nonsolicitation agreements, but are they enforceable? What happens when a well-qualified employee applies for an open position, but informs you that she signed a noncompetition, nondisclosure agreement with her current employer? How will that impact your hiring decision?