A National Labor Relations Board official said in a memo that making employees sign a noncompete agreement is usually a violation of U.S. labor laws.
According to the memo sent out to NLRB lawyers Tuesday, NLRB General Counsel Jennifer Abruzzo said that while there are some exceptions, the agreements tend to curb employee rights.
A noncompete agreement is a contract between an employee and their employer that bars an employee from accepting certain work after their employment ends. Many of these agreements are in place to protect trade secrets between competing companies.
Ms. Abruzzo says that the agreements generally violate National Labor Relations Act, which protects employees’ rights to self-organization and collective bargaining.
Despite this, she says that there are circumstances where noncompete agreements could be allowed. However, she says that the agreements must be “narrowly tailored to special circumstances justifying the infringement on employee rights.”
One example of a lawful noncompete agreement would be where the agreement restricts employee ownership in a competing company.
Noncompete contracts are particularly unpopular among Democratic lawmakers and workers’ rights groups. Currently, three states, California, North Dakota and Oklahoma have banned such agreements. Several more states have severe restrictions on noncompete agreements.
A proposal from the Federal Trade Commission to ban noncompete agreements is currently pending. The proposal drew the ire of businesses who say that such agreements increase healthy competition and protect crucial secrets.
• Vaughn Cockayne can be reached at vcockayne@washingtontimes.com.
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