On October 7, National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo sent a memo to staff outlining heightened enforcement against illegal non-compete agreements. The 17-page memo outlines Abruzzo’s intention to assess costs to violators of the non-compete rules. In addition, the memo to staff indicates Abruzzo’s intention to challenge employer policies that require employees to repay training costs or other penalties if they leave within a specified time frame.

Abruzzo’s plans are subject to approval by the NLRB board, which is currently controlled by Democrats. If the NLRB fails to stop or modify their general counsel’s plans, then Abruzzo has signaled her intent that the NLRB seek monetary damages for employees harmed by non-compete agreements. This goes beyond the NLRB simply getting employers using illegal non-compete agreements to rescind those agreements.

“Employers have used these provisions as coercive restrictors of employee mobility, which is not a legitimate business interest,” Abruzzo said.

 Prospects: The NLRB does not have the legal authority to fine employers, and many experts say her intended actions are too expansive a reading of the NLRB’s “make whole” remedies. They are no more than disguised employer fines, these experts say. Thus, legal challenges to these intended actions are likely. It is also worth noting that the NLRB is an independent agency, and so its leadership is not subject to automatic change by the incoming Trump Administration. Thus, the current Abruzzo threat will outlast the November 5 election results.

 NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org; or Michael Hedge – Senior Director – Government Relations, at mhedge@naifa.org.