The National Labor Relations Board’s acting general counsel withdrew a memorandum issued by his predecessor that characterized some non-competition agreements with employees as violations of federal labor laws. The move was expected and likely ends federal efforts to restrict non-competition agreements, at least for now.
The NLRB memo was less publicized than Federal Trade Commission regulations that would prohibit use of most non-competes under federal commerce laws. Those rules were enjoined by a federal district court, and the Trump administration advised the appellate court that it is considering whether or not to pursue the appeal of that decision filed before the presidential transition.
Unlike the FTC rules, the NLRB never heard a case or issued regulations backing the general counsel’s interpretation. Groups representing employers contended that both agencies' actions exceeded the scope of their authorizing legislation. The Trump administration has shown little interest in regulating non-compete agreements, despite a number of red state legislatures that have restricted or banned use of such agreements in recent years.
In the absence of federal action, non-compete agreements will remain the purview of state laws. Employers interested in using non-compete agreements with employees need to carefully tailor such contracts to the state where the employee works, and keep up to date on potential legislative and judicial changes to the enforceability of such agreements in those states.
[View source.]
