Over last week, two seemingly unconnected events happened that impact restrictive covenant and labor law. First, the National Labor Relations Board’s General Counsel, Jennifer Abruzzo, issued a memorandum opining that certain non-compete agreements may violate the National Labor Relation Act by suppressing workers’ ability to engage in protected concerted activity. Second, the Supreme Court issued the Glacier Northwest, Inc. v.
Continue Reading Did the NLRB Preempt Non-Compete Litigation?
The FTC is not alone in taking aim at non-competes. Yesterday, the NLRB’s General Counsel Jennifer Abruzzo issued a memo to all regional directors, officers-in-charge, and resident officers at the NLRB stating that non-competes in employment agreements and severance agreements violate the National Labor Relations Act except in rare circumstances. Specifically, Ms. Abruzzo claims that such covenants interfere with workers’
Continue Reading The NLRB Joins the Fray: Another Attack on Non-Competes
Minnesota is joining the growing list of state legislatures targeting non-compete agreements, and doing so with one of the most aggressive laws in the nation on the subject. Included as part of the Senate Jobs and Economic Development and Labor Omnibus Budget Bill (S.F. 3035), the newly-enacted Minn. Stat. Section 181.988 (“Section 181.988”) categorically bans non-compete agreements with Minnesota workers
Continue Reading Gopher State Goes For Broke with Non-Compete Ban
The UK government has announced that it will bring in legislation to restrict the post-employment non-compete restraints to three months. This is a significant proposal as currently non-compete restrictions in the UK are generally capable of being enforced for a period up to 12 months (if they are “no more restrictive than is reasonably necessary to protect the employer’s legitimate
Continue Reading UK Government Moves to Limit Non-CompetesTuesday, May 2, 2023
12:00 p.m. to 1:00 p.m. Central
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Join us for a program that will dive into the issues surrounding non-competes in the health care industry. Seyfarth attorneys will engage in a lively panel discussion
Continue Reading Upcoming ACC Houston Webinar: Non-Competes in the Health Care Workplace
The FTC announced yesterday that it was extending the deadline to submit public comments on its proposed rule banning employment non-competes.
With the extension, the FTC will now be accepting comments on the proposed rule until April 19. Originally, the deadline for submitting comments was March 20.
Information on how to submit comments can be found in the Federal Register notice.
On February 21, 2023, the National Labor Relations Board (“NLRB” or “Board”) once again issued new precedent when holding that the mere proffer of a draft severance agreement containing broad confidentiality and non-disparagement provisions violated the National Labor Relations Act (“NLRA” or “Act”). The severance agreement provisions before the Board contained extremely broad restrictions and arose in the context of underlying unfair labor practices (“ULPs”) that included circumventing a certified bargaining representative. It remains to be seen, therefore, whether the Board will seek to invalidate more narrowly-tailored confidentiality and non-disparagement provisions.
Continue Reading NLRB Targets Confidentiality and Non-Disparagement Provisions
On February 16, 2023, the FTC hosted a public forum for the purpose of examining the proposed rule banning non-compete agreements. The agenda included, among other things, opening remarks from Chair Kahn, an overview of the rulemaking process by the FTC’s general counsel, a panel discussion, and comments from the public. A recording of the forum is available here.
In her preliminary remarks, Chair Kahn claimed that the proposed rule would increase workers’ earnings significantly and non-competes are an unfair method of competition. She claimed that the FTC has deep expertise on non-competes based upon enforcement, analysis, and addressing public comments. During the explanatory session, FTC staff explained that the comment period ends March 20th and encouraged the submission of additional comments. Staff also explained the functional test in the proposed rule and indicated that the ban applies to any agreement that functionally operates as a non-compete, which could be an overly broad non-disclosure agreement or training repayment agreement. FTC staff stated that the proposed rule does not apply to “run of the mill non-disclosures.”
As earlier reported on this blog, Commissioner Christine Wilson, the sole dissenter in the Federal Trade Commission’s proposed rule banning non-competes, announced yesterday that she is resigning from the agency over her fierce opposition to progressive FTC Chair Lina Khan’s methods of advancing her agenda. In a Wall Street Journal OpEd, Commissioner Wilson took aim at Ms. Khan’s “disregard for the rule of law and due process.” She cited several examples of this alleged disregard for the rule of law and due process, including the FTC’s launch of the rulemaking process to ban nearly all non-compete clauses in employee contracts, affecting roughly one-fifth of employment contracts in the US. As Commissioner Wilson noted in her vigorous dissenting statement to the FTC’s Notice of Proposed Rulemaking (“NPR”), the proposed rule defies the Supreme Court’s decision in West Virginia v. EPA (2022), which held that an agency can’t claim “to discover in a long-extant statute an unheralded power representing a transformative expansion in its regulatory authority.” As Commission Wilson noted in her dissent, and as we have pointed out here and here, the FTC’s NPR purports to undo hundreds of years of state legal precedent—dating from even before the American Revolution—that employs a fact-specific inquiry into whether a non-compete clause is unreasonable in duration and scope, given the business justification for the restriction.
There have been some significant developments since the FTC announced its proposed rule banning non-competes in early January.
First, the FTC will be hosting a virtual public forum on its proposed rule on February 16th from 12 p.m. to 3 p.m. Eastern.
The forum is open to the public (see agenda for the forum here). The commission will
Continue Reading The Non-Compete Crackdown Continues: FTC Hosts Public Forum on Proposed Rule to Ban Non-Competes, Biden Attacks Non-Competes in State of Union Speech, and FTC Commissioner Wilson Resigns