The National Labor Relations Board (NLRB) has recently issued a complaint against a company over the maintenance and enforcement of noncompete and non-solicit provisions. The General Counsel of the NLRB is pressing the unexplored legal theory that such agreements transgress the stipulations of the National Labor Relations Act (NLRA). This action aligns with the NLRB’s continued efforts to challenge the legality of noncompetes.
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Noncompete and non-solicit provisions, commonly embedded as clauses within employment contracts, are tools that employers frequently turn to in an attempt to guard trade secrets, client relationships and maintain their competitive edge. The controversy surrounding these terms largely revolves around their potential to unfairly limit an employee’s ability to pursue opportunities post-employment.
The NLRB’s General Counsel’s endeavor to invalidate these provisions asserts that noncompete clauses violate an employee’s rights under the NLRA. At the heart of this matter is whether the provisions violate the NLRA’s protection of employees’ rights to engage in mutual aid and protection. Undoubtedly, this case could instigate a serious re-evaluation of common employer practices regarding noncompete and non-solicit provisions.
As the NLRB presses on with its challenge, the corporate world and legal professionals alike will undoubtedly pay close attention to the outcome. Regardless of the verdict, the issue will likely catalyze a wider conversation about the boundaries of employment contracts and the rights of employees upon exiting a role.