On Feb. 14, the National Labor Relations Board’s (NLRB’s) Acting General Counsel, William Cowen, rescinded two general counsel (GC) memos opining that virtually all non-compete and stay-or-pay agreements would violate the National Labor Relations Act (NLRA). This action does not resolve all the non-compete agreement issues currently in play, but it does signal a shift in NLRB thinking on the issues.

Rescinded were GC Memorandum 23-08 (Non-Compte Agreements that Violate the National Labor Relations Act), and GC Memorandum 25-01 (Remedying the Harmful Effects of Non-Compete and Stay-or-Pay Provisions that Violate the National Labor Relations Act).

While GC memos are not binding law, they do foreshadow likely binding NLRB decisions. Thus, this turnaround at the NLRB GC office is significant. However, it does not impact Federal Trade Commission (FTC) activity, where the FTC’s now final rule that would disallow virtually all non-compete agreements has been blocked by the courts.

Prospects: Binding action from the NLRB, whether helpful or adverse, is unlikely any time soon. The NLRB’s quorum is shaky. Fired board member Gwynne Wilcox has been reinstated by a district court, but her reinstatement is subject to appeal. If the appellate court upholds her firing, the NLRB will be without a quorum and therefore would be unable to issue new opinions. However, President Trump is expected to nominate new NLRB members relatively soon. Those nominees will have to go through the confirmation process, which could take some time.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.