On February 14, 2025, the National Labor Relations Board (NLRB) rescinded enforcement memorandums that had made companies exposed to suit for utilizing certain non-competes and non-disclosures. In fact, the memorandums provided guidance on how employees could demonstrate harm and how employers were exposed from utilizing such non-competes and non-disclosures for lost wages, benefits, and other expenses incurred by the employee.
Specifically, the NLRB rescinded:
- GC 23-08 Non-Compete Agreements that Violate the National Labor Relations Act
- GC 25-01 Remedying the Harmful Effects of Non-Compete and “Stay-or-Pay” Provisions that Violate the National Labor Relations Act
- GC 23-05 Guidance in Response to Inquiries about the McLaren Macomb Decision
The core argument is that non-compete provisions and stay-or-pay provisions (i.e., nullifying debt incurred by employee only if they stay in employment for a period of time) can restrict employees' rights to engage in protected concerted activities, such as organizing or advocating for better working conditions. Further, The McLaren Macomb ruling determined that broad confidentiality and non-disparagement clauses in severance agreements could violate employees' rights under Section 7 of the NLRA.
