Latest NLRB Attack Goes beyond Non-Compete Agreements to Reach Outside Employment

An interesting article concludes that the NLRB is invalidating employer rules "one clause at a time."  On January 31, 2024, the NLRB's Division of Advice said that restricting employees from holding outside or secondary employment violates the Labor Act.  This position follows a May 2023 memo that said that non-compete agreements are unlawful because they adversely affect an employee's ability to change jobs.  The memo would even preclude an employer from requiring employees to sign training repayment agreements that demand repayment of training costs if they left employment before a certain date.

The concept behind these positions is that employees should be able to improve their working conditions by seeking other employment opportunities, whether during their current employment or not.  Further, the NLRB argues that such employment rules prohibit "salting," the practice of union agents acquiring jobs in particular workplaces for the purpose of unionizing that employer.  The memo did not even provide any suggestions as to exceptions to the rule on outside employment, such as when the second job conflicts with the employer's business.  The memo does offer guidance as to how employers can properly draft their confidentiality and proprietary information policies, such as by listing things that are clearly proprietary, making no reference to employee information, wage information, or anything related to working conditions.  

Editor's Note - Many will ask whether these concepts, which many believe are ridiculous, are currently the "law of the land."  The answer is that they are not, but they are nevertheless the enforcement position of the NLRB.  These enforcement rules must be approved by the NLRB Board itself, currently operating with three former union attorneys.  Employers that resist NLRB rulings still have the right to have their cases reviewed in a federal appeals court.  Courts sometimes reject the NLRB's policies, as evidenced by the Stern Produce Co. case discussed in this newsletter.  

Nevertheless, wise employers will have their policies reviewed by experienced labor counsel to address blatant situations and lower the risk.  Sometimes disclaimers can be added to a work rule to improve its enforcement potential, by indicating that such rules or policies shall not be interpreted or applied to activities protected by Section 7 of the National Labor Relations Act.  Such disclaimers may work in certain situations but are unlikely to be universally upheld and special drafting considerations are necessary.

This article is part of our May 2024 Newsletter. 

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