Labor Board Official Says Noncompetes Violate US Labor Law

On Tuesday, a US labor board official stated that the practice of requiring workers to sign contracts prohibiting them from joining competing companies is typically against the law. This is part of an ongoing effort by government regulators to limit this practice.

According to a memo from National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo to agency lawyers, “noncompete agreements” may have a discouraging effect on workers’ exercise of their rights to advocate for improved working conditions under US labor law, as reported by Reuters.

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In a memo released on Tuesday, Abruzzo, who was appointed by Democratic President Joe Biden, stated that non-compete agreements are in violation of labor law unless they are specifically tailored to exceptional circumstances that justify the infringement of employee rights.

According to Abruzzo, the agreements may prohibit employees from using their resignation as a bargaining tool to seek better salaries or workplace conditions.

According to Abruzzo’s statement, limitations on ownership interests in a competing business may also be considered lawful.

The general counsel of the NLRB serves as a prosecutor and presents cases of unfair labor practices to the five-member board, which presently has a majority of Democratic members.

In January, the US Federal Trade Commission proposed a rule to prohibit companies from mandating noncompete agreements for their employees. The proposal is currently awaiting further action.