Management Memo

National Labor Relations Board (“Board”) General Counsel Jennifer Abruzzo (“Abruzzo”) issued a General Counsel Memo (Memo GC 25-01) last week signaling that employers could face civil prosecution and significant monetary remedies for using non-compete and so-called “stay-or-pay” provisions in agreements with their employees.The new memo, issued on October 7, 2024, builds on Abruzzo’s earlier General Counsel Memo issued in May 2023, where, as we reported, she outlined her belief that nearly all post-employment non-competes violate employees’ rights under the National Labor Relations Act (the “Act”).

Since Abruzzo’s May 2023 memo, employers have witnessed a number of significant developments in this space, including the Federal Trade Commission’s (“FTC”) issuance of a rule in April 2024 banning the use of most non-competes and a subsequent decision by a Texas federal judge blocking that FTC rule. In June 2024, an NLRB Administrative Law Judge issued a ruling in a case involving an Indiana HVAC company finding that non-competes and non-solicitation clauses violate the Act, a decision currently being appealed to the Board.

In her October 7, 2024 memo, Abruzzo again urges the Board to find non-competes with all employees who are subject to the Act’s jurisdiction (nonmanagerial and nonsupervisory employees) to violate the Act except in a few limited circumstances, arguing that such provisions are frequently “self-enforcing” and deter employee mobility. She also advocates for “make whole” remedies where employers are found to have continued to maintain unlawful non-competes. Specifically, the memo argues that merely voiding such provisions is insufficient and that employees should be afforded the right to seek compensatory relief for the “ill effects” that flow from complying with “unlawful non-compete provisions.”

On September 12, 2024, the Regional Director of the National Labor Relations Board’s (“NLRB”) Region 22 in Newark, New Jersey, issued an unfair labor practice complaint against a New Jersey building services company, alleging that employee non-hire (or “no poach”) provisions in the company’s contracts with its building clients violate the National Labor Relations Act (the “Act”).

According to the NLRB’s news release, the complaint alleges that Planned Companies D/B/A Planned Building Services, which is a janitorial, building maintenance, and concierge services provider, “has maintained provisions in its contracts with its client buildings that interfere with, and are inherently destructive of, workers’ rights under Sections 8(a)(1) and (3) of the National Labor Relations Act.”  It further alleges that “Planned Companies restricts its client buildings from soliciting its employees to work for them in a similar job classification for a period of six months after the agreement is terminated, or from hiring employees after they leave Planned Companies’ employment. Any entity retained by the client building to replace Planned Companies is also bound by the hiring restriction.” 

A hearing before an NLRB Administrative Law Judge has been set for November 12, 2024.

In an action brought by Space Exploration Technologies Corporation, commonly known as SpaceX, a U.S. District Court Judge in the Western District of Texas, Waco Division, has declared that the structure of the National Labor Relations Board (“NLRB” or the “Board”) is unconstitutional.

The determination is the basis for an Order granting SpaceX’s motion for a preliminary injunction and enjoining the NLRB General Counsel, as well as the presidentially appointed, Senate-confirmed Board Members and NLRB staff, from proceeding with a scheduled unfair labor practice ...

On Tuesday, the three-member, all Republican, National Labor Relations Board (the “Board”) issued a 3-0 decision in General Motors LLC and Charles Robinson, 369 NLRB No. 127 (July 21, 2020), reversing its longstanding standard for determining when employers violate the National Labor Relations Act (the “Act”) by disciplining employees who, while engaged in activity protected under Section 7 of the Act, use profanity-laced speech, as well as racial, ethnic or sexist slurs, or other abusive conduct toward or about management or other employees. Going forward, including ...

As we have discussed in prior Advisories, the 2019 Novel Coronavirus (“Coronavirus” or “COVID-19”) public health emergency is raising important issues for employers addressing rapidly developing disruptions to the workplace and the lives of employees with mass school closures, workplace closings, the need to reduce staff and expenses, etc. Employers with  unionized workforces must take certain additional considerations into account when developing and implementing response plans to the current crisis.

Under the National Labor Relations Act (“NLRA” or ...

The National Labor Relations Board has announced the issuance of its final rule governing joint-employer status. The new rule, which was first proposed in September 2018 and has been the subject of extensive public comment, will become effective April 27, 2020.

The critical elements for finding a joint-employer relationship under the new rule is the possession and the exercise of substantial direct and immediate control over the terms and conditions of employment of those employed by another employer.  The essence of the new rule is described in the Board’s February 25, 2020 press ...

As summer turned to fall, the National Labor Relations Board (“NLRB” or the “Board”) issued a steady stream of decisions with significant and favorable implications for employers.  In the flurry of recent decisions, the Board addressed misclassification of workers as independent contractors, employers’ rights to control access to private property (Tobin Center for Performing Arts, UPMC, and Kroger Mid-Atlantic), the right to impose class action waivers in the wake of employment lawsuits, withdrawal of union recognition, the appropriate scope of bargaining units