Last week, the National Labor Relations Board (NLRB)’s General Counsel publicly announced her position that most non-compete agreements violate the National Labor Relations Act (NLRA) by chilling employees’ ability to exercise their rights to engage in protected activity. Remember, the NLRA applies to all private sector employees that are in non-supervisory positions. This means those employees may now be able to bring a claim that their non-compete is in violation of the NLRA. It will be important for all employers to evaluate this risk regarding current employees with non-competes, and how they use non-competes moving forward. For your reading pleasure, the memo can be found here: NLRB General Counsel Issues Memo on Non-competes Violating the National Labor Relations Act | National Labor Relations Board)
Also in May, Minnesota’s Governor signed into law a bill that effectively bans all non-compete agreements in the state. (SF 3035 Status in the House for the 93rd Legislature (2023 – 2024) (mn.gov). The law will go into effect July 1, 2023. Notably, the ban does not apply to non-solicitation agreements or those non-compete agreements agreed upon during the sale of a business. Still, given the applicability of the ban to nearly all other employees, employers with employees in Minnesota will want to review their current non-compete agreements and potentially remove them altogether.
Finally, we await the FTC’s final rule regarding its proposed nationwide ban on non-compete agreements. Our recent alerts on that topic can be found here. (FTC Announces Vote to Publish Proposed Rules that Would Ban All Noncompete Provisions Restricting Workers – Wisconsin Business Attorneys (ruderware.com); FTC’s Non-Compete Proposal: FAQ – Wisconsin Business Attorneys (ruderware.com). The FTC’s public comment period closed April 19, and over 20,000 comments were submitted. We assume it will take some time for it to sift through all these comments.
Ruder Ware will be keeping a close eye on what each of these developments means for the future of non-compete agreements.
Summer Associate, Morgan Sweeney, contributed to this article.
