On October 7, 2024, the National Labor Relations Board (\u201cNLRB\u201d) General Counsel Jennifer Abruzzo (the \u201cGC\u201d) issued a memo to all field offices discussing two important topics: non-compete agreements and stay-or-pay provisions. The memo lays out her intent to not only prosecute employers who require that their employees sign non-compete and stay-or-pay provisions, but to, as fully as possible, remedy the harmful monetary effects employees experience as a result of these provisions. Here, we summarize the intricacies of the NLRB\u2019s standards for businesses. <\/p>\n\n\n\n
Non-Compete Agreements<\/em><\/strong><\/p>\n\n\n\n The GC stated her position that overboard non-compete agreements are unlawful because they may prevent employees from exercising their rights under Section 7 of the National Labor Relations Act, which protects employees\u2019 rights to take collective action to improve their working conditions.<\/p>\n\n\n\n To remedy the effects of unlawful non-compete provisions, recission alone will fail to remedy all the harms caused by the provisions and the memo calls for make-whole relief in the following manner:<\/p>\n\n\n\n Where a Region determines that these criteria are satisfied, the employer must compensate employee for the difference (in terms of pay and benefits) between what they would have received and what they did receive during the same period. Employees may also be entitled to make-whole relief for additional harms or costs associated with complying with the non-compete during the post-employment period, until those restrictions expired.<\/p>\n\n\n\n Stay-or-Pay Provisions: Presumptively Unlawful<\/em><\/strong><\/p>\n\n\n\n Like non-compete agreements, stay-or-pay provisions have recently become increasingly common in American workplaces. Stay-or-pay provisions are defined as \u201cany contract under which an employee must pay their employer if they separate from employment, whether voluntarily or involuntarily, within a certain time frame.\u201d These provisions take a variety of forms including, training repayment agreement provisions, educational repayment contracts, quit fees, damages clauses, and sign-on bonuses or other types of cash payments tied to a mandatory stay period.<\/p>\n\n\n\n The GC opined that stay-or-pay provisions are presumptively unlawful and have the potential to suppress union organizing and other concerted activity for mutual aid or protection, including by impairing employee job mobility and believes such provisions must be narrowly tailored to minimize the infringement of Section 7 rights.<\/p>\n\n\n\n Employers can rebut the presumption and to meet the burden, the provision must: (1) be voluntarily entered into in exchange for a benefit; (2) have a reasonable and specific repayment amount; (3) have a reasonable \u201cstay\u201d period; and (4) not require repayment if the employee is terminated without cause.<\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" On October 7, 2024, the National Labor Relations Board (\u201cNLRB\u201d) General Counsel Jennifer Abruzzo (the \u201cGC\u201d) issued a memo to all field offices discussing two important topics: non-compete agreements and stay-or-pay provisions. The memo lays out her intent to not only prosecute employers who require that their employees sign non-compete and stay-or-pay provisions, but to, …<\/p>\n","protected":false},"author":1,"featured_media":1863,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","content-type":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-1855","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-employment-articles"],"yoast_head":"\n\n
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