Key Takeaways
- In May 2023, former General Counsel of the National Labor Relations Board (“NLRB”) Jennifer Abruzzo issued Memorandum GC 23-08, which argued that non-competition agreements generally violate the National Labor Relations Act (“NLRA”);
- The NLRB rescinded Memorandum GC 23-08 in February 2025;
- In an advice memorandum released June 26, 2026, the NLRB reaffirmed its current position that non-competition agreements generally do not violate the NLRA.
On June 26, 2026, the NLRB released a memorandum from the Division of Advice stating that “an employer does not violate the [NLRA] by maintaining” a non-competition agreement for its employees. The NLRB’s memorandum reaffirms the agency’s current position that non-competition agreements are generally legal and enforceable. Just three years ago, the NLRB’s former General Counsel issued a memorandum opining that non-competition agreements violate the NLRA. In February 2025, the NLRB rescinded that position shortly after President Donald Trump’s inauguration, and its recently released memorandum confirms that, presently, the NLRB does not believe non-competition agreements violate the NLRA.
In May 2023, the NLRB Opined that Non-Competition Agreements Generally Violate the NLRA
On May 30, 2023, former NLRB General Counsel Abruzzo issued Memorandum GC 23-08, in which she opined that the proffer, maintenance and enforcement of non-competition agreements generally violate the FLSA.
Specifically, former General Counsel Abruzzo argued that non-competition agreements chill employees from engaging in Section 7 activity because, she contended, employees know they will have greater difficulty replacing lost income if they are discharged for exercising their rights to organize. She further reasoned that non-competition agreements could prohibit employees from engaging in various types of protected activity, such as threatening to resign to demand better working conditions; seeking or accepting employment with a local competitor to obtain better working conditions; soliciting co-workers to work for a local competitor; and seeking employment for the purposes of engaging in protected activity with others at an employer’s workplace.
Former General Counsel Abruzzo contemplated that there were “limited circumstances” in which a non-competition agreement would not violate the NLRA, such as agreements that clearly restrict only individual managerial or ownership in a competing business (as opposed to restricting employment), agreements in true independent-contractor relationships and agreements in special circumstances that justify narrowly tailored restrictions on competition.
Former General Counsel Abruzzo encouraged regional directors to “seek make-whole relief for employees who, because of their employer’s unlawful maintenance of an overbroad non-compete provision, can demonstrate that they lost opportunities for other employment, even absent additional conduct by the employer to enforce the provision.”
In February 2025, the NLRB Reversed Course and Rescinded Memorandum GC 23-08
Less than two weeks after the 2025 inauguration, President Trump discharged General Counsel Abruzzo and selected William Cowen to serve as her acting replacement. On February 14, 2025, acting General Counsel Cowen rescinded Memorandum GC 23-08, along with numerous other memoranda issued by former General Counsel Abruzzo.
The NLRB Affirms the Enforceability of Non-Competition Agreements
Consistent with its prior rescission of Memorandum GC 23-08, the NLRB recently confirmed that “non-compete agreements do not as a general matter impact employees’ rights under Section 7.”
In a May 5, 2026, memorandum that was released on June 26, 2026, the NLRB Division of Advice recommended dismissing charges against employer Biotricity arising from the maintenance (and enforcement) of a non-competition agreement. Biotricity’s non-competition agreement prohibited former employees from working for a competitor, or from using Biotricity’s confidential information, for a period of six months after termination. The agreement broadly defined “confidential information” as “all information not generally known to the public.”
The NLRB Division of Advice recommended dismissing unfair labor practices charges against Biotricity, explaining that “an employer does not violate the [NLRA] by maintaining non-compete provisions covered by Memorandum GC 23-08, which was rescinded in Memorandum GC 25-05.” Accordingly, the Division of Advice concluded that Biotricity’s non-competition agreement does not impact employees’ Section 7 rights and does not violate Section 8. The Division of Advice further concluded that, although the agreement’s definition of confidential information was broad, employees would reasonably understand that it only prohibited them from sharing confidential information with competitors (as opposed to Section 7-protected communications with other employees) given its inclusion in the non-competition agreement.
Takeaways
The NLRB’s recent advice memorandum confirms that the agency generally views non-competition agreements as permissible under the NLRA, which is a stark contrast from the agency’s position under the prior administration.
If you have any questions about your restrictive covenants or other employment agreements, please reach out to your local Dinsmore attorney.