On May 30, 2023, the General Counsel of the National Labor Relations Board issued a memo to all NLRB Directors and Officers, advising them of the NLRB's view that non-compete provisions in employment contracts and severance agreements violate the National Labor Relations Act, with a few limited exceptions. The memo explains that broad non-compete agreements violate Section 7 of the National Labor Relations Act by interfering with employee's ability to resign to secure better working conditions, to solicit their co-workers to join them, and to accept employment in their field of expertise with a competitor who might offer better working conditions.
According to the General Counsel: “Non-compete provisions reasonably tend to chill employees in the exercise of Section 7 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 type and location of work."
The General Counsel wrote that there may be narrow exceptions, including when noncompete agreements narrowly restrict the employee from managerial or ownership interests in a competing business.
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