NLRB Administrative Law Judge Rules against Non-Compete and Solicitation Clauses under Labor Act

On June 13, 2024, an NLRB administrative law judge ruled that J.O. Mory, Inc. violated the National Labor Relations Act (NLRA) by maintaining unlawful non-compete and solicitation policies.  The judge explained that the non-compete agreement would cause a reasonable employee to refrain from engaging in protected activities because if an employee knows they are barred from being involved with a company that operates a similar business to the employer, they will be more fearful of being fired and less willing to rock the boat, as they face the prospect of being unable to find any work in their geographic area if they are fired or forced to leave their job.  The provisions prohibiting employees from soliciting their co-workers to leave the employer and requiring that employees disclose solicitations to the employer also interfere with protected activities, like telling co-workers about union benefits, participating in and recruiting others to work at another employer in an effort to unionize, and making concerted threats to quit.  The judge ordered the employer to cease and desist from enforcing the unlawful activity and offer reinstatement to the unlawfully terminated employees, making them whole for loss of earnings and financial harm suffered.  

Editor's Note:  The NLRB General Counsel has been advocating this type result, but this is the first NLRB ruling on the subject, although it comes from an administrative law judge rather than the Board itself.  The NLRB issued a press release on this case, suggesting its importance to the Board.  It should be noted that the case was analyzed under the concept of overbroad policies, but an employer will find difficulty drafting more narrow rules to comply with this doctrine.  The full Board will undoubtedly review this case, but the current makeup of the Board seems to support almost any doctrine that favors union organizing. 

This article is part of our August 2024 Newsletter. 

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