When the Earth Shifted: The Banning of Non-Competition Agreements

Okay, welcome back. This is Mark and the next edition of the Employee Surival Guide. Today, talking about a continuing subject matter related to non-competes. The NLRB, which is the National Labor Relations Board, ruled in May 30, 2023 that non-competition agreements are illegal, nationwide Illegal for all employees and that well, here's the gist. The National Labor Relations Board Chief Counsel issued a legal opinion on that date May 30, 2023, banning non-competes agreements for all employees with few limited exceptions. All employees must take notice and read the press release below and I'll include it into the links in this podcast and the link to legal memorandum issued by the NLRB General Counsel. Jennifer Abruzzo, if you are currently under threat of enforcement of your non-competition agreement, this is your immediate answer it's legally unenforceable. The NLRB General Counsel legal opinion has the force of law for the following reasons. First, courts give administrative deference to federal agencies because the subject matter here the union and collective action and non-competition agreements falls within the specialized purview of the federal agency, the NLRB. Second, as the legal opinion states, the General Counsel is, regarding the NLRB, except cases from employees just like you, whereby non-competition agreements are used by employers to interfere with employee rights by attempting to use and enforce non-competition agreements on their current and former employees. So they're inviting you as employees, when you have these situations, to notify them. So, nlrbgov, go there, make a complaint, save a non-compete agreement and see what they do about it. This is all brand new territory. Oh, and, by the way, send a copy of that email to your employer. They'll be scared shitless, I'm sure. For all employees this is a big deal. Employers who seek to enforce non-competition agreements should be told by current and former employees that any non-competition agreement is legally unenforceable because the agreement violates the National Labor Relations Act. It's not a small task. That's a huge, big statement that the NLRB has made.

For now, a copy of the General Counsel's memo. I'll put links in the podcast show. You can see it and hand it to your employer or former employer when they threaten you to enforce their sham non-competition agreement. Like I said before, send a message via email and attach a copy of the memo. Then wait and see and see if the employer sends you a cease and desist letter. It's highly unlikely that they will. Cis and CIS letters usually have a threaten you to make you comply with their nonsense agreement. They generally don't go anything further beyond that in terms of if they don't file lawsuits because it takes money to do that.

The General Counsel's memo and the recent FTC proposed, ruled and banned non-competition agreements under the federal antitrust laws is a pivotal moment in history for all employees. According to the memo, it is now the law of the land, or at least the current threat to employer enforcement of these one-sided non-competition agreements. Now I've included and I'll go through the press release because I want you to hear exactly what they're saying at the agency level. The NLRB press release stated the following NLRB General Counsel Jennifer Abruzzo sent a memo to all regional directors, officers in charge and resident officers setting forth her view that the proffer maintenance and enforcement non-competition provisions and employment contracts in seven agreements violate the National Labor Relations Act, except in limited circumstances. There you go, that's what she said.

The memo explains that overbroad non-competent agreements are unlawful because they chill employees from exercising their rights under section seven of the National Labor Relations Act, which protects employees' rights to take collective action to improve their working conditions. She goes on to say, specifically, these agreements interfere with employees' ability to one concertedly threaten to resign to secure better working conditions. Number one to concertedly threaten, meaning together other employees to resign to secure better working conditions with whom Another competitor. Two, she says, carry out concerted threats to resign and otherwise concertedly resign to secure improved working conditions again with other employees. Three concertedly seek or accept employment with a local competitor to obtain better working conditions. Sounds like number one, but she nonetheless says the same thing again. Four solicit their coworkers to go to work for a local competitor as part of a broader course of protected, concerted activity. I'd like that one that should piss some employers off. Five seek employment, at least in part, to specifically engage in protected activity, including union organizing, with other workers at an employer's workplace. Do you get the gist of this?

She goes on to say non-compete provisions reasonably tend to chill employees in the exercise of section seven rights, when the 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 the type and location of work. This denial of the access of employment opportunities interferes with workers engaging in section seven activity in a number of ways. For example, workers know that they will have greater difficulty replacing their lost income if they are discharged for exercising their statutory rights to organize and act together to improve working conditions. Their bargaining power is undermined in the context of lockouts, strikes and other labor disputes, and their social ties and solidarity leading to improvements in working conditions at workplaces are lost as they scatter to the forewinds. General Counsel Abruzzo explains that in some cases non-compete agreements could be lawful in the provisions, clearly if the provisions clearly restrict only individuals' managerial and ownership interests in a competing business or true independent-contracted relationships. Moreover, there may be circumstances in which a narrowly tailored non-compete agreement infringement on employees' rights may be justified for special circumstances. That's the press release. A big wow, okay, that's a huge deal. If you didn't know what this issue was, if you have a non-compete, you know exactly what I'm talking about. Now you have a new angle of attack of dealing with this issue.

The NLRA General Counsel's memo referenced in a footnote the 13th Amendment to the United States Constitution indicating the severity of the public policy issue non-competition agreements present. She quoted in her footnote a famous spring court case and I'll read the quote the undoubted aim of the 13th Amendment was not merely to end slavery, but to maintain a system of completely free and voluntary labor throughout the United States". That's from Pollock v Williams 1944, us spring court. In summary, what is moving the ball here on the final eradication of non-competition agreements nationwide is the billions of dollars lost on wages, the result from employers forcing non-competition agreements on employees and the anti-union employer sentiment. It also appears that the NLRB has a very real fear about current and future violations of the 13th Amendment caused by entrapped and involuntary labor. Employees have never benefited from these one-sided employment agreements and the courts were never the legislative body or administrative agency to properly enforce public policy on this scale. In fact, in my experience, courts are extremely reluctant to enforce non-competition agreements against any employee, especially after the global pandemic we just came out of. The NLRB has finally set all employees free.

It's a big goddamn deal, folks, and if you don't read up on this and follow it to protect yourself, this is going to your pocketbook, your money, your bank account. If you don't believe me, just don't do anything and let the employer enforce it against you and you're sitting on the bench waiting to find your next job because you can't do the very job that you've been spending your entire career doing, because you had a non-competition agreement you didn't actually negotiate and you got to hire me to get you out of it. It's a big deal. You take this little memo, you send it to your employer and say you know what? I don't think. So, mr Employer, I'm going to report this to the NLRB. They're asking me to do that. The general counsel is asking me, as an employee, to do that. Mr Employer, release me from the agreement or else I will do that. You don't need a lawyer to do that, just do it yourself. It's all there for you.

I've given you information in this podcast. I'll put in the show notes. I also just put a blog post out on it in case you need to go there too. It's the same damn information. Heed the warning, heed the law. You have your answer that you always wanted. I couldn't be happier for you all. And when the Federal Trade Commission finally gets around to it after all the lobbyists in K Street mess around with them and try to convince them not to do it and they pass a rule banning non-competes from the antitrust level, then we'll have to wait until next year, I'm told. Well, that's going to roll into a political cycle, I think. The presidential election's next year, gee, and then lawsuits will follow. You don't have to wait. The NLRB gave you exactly what you needed. The FTC the Federal Trade Commission is going to be delayed installed, but the NLRB says this is the law of the land and you're going to follow it. Good luck and stay tuned.