NLRB Warns Employers Most Noncompete Agreements Violate Federal Labor Laws

Requiring workers to sign employment or severance agreements that prevent them from joining competing companies is usually illegal except under narrow circumstances, the National Labor Relations Board General Counsel Jennifer Abruzzo said this week. 

In a memo to NLRB regional directors on Tuesday, Abruzzo said broad noncompete agreements violate federal labor laws because a worker’s ability to advocate for higher wages or better working conditions is undermined if he or she is unable to easily switch jobs.  

The memo asks NLRB lawyers to refer cases of unlawful noncompete agreements to her office. 

This is the latest attempt by the federal regulators to reign in the practice of using noncompete agreements. In January, the Federal Trade Commission proposed a rule that would ban noncompete agreements. The proposal is still pending.