The New Jersey Employment Law Firm Blog
Workers have the right, under both federal and New Jersey employment laws, to engage in activities related to organizing and negotiating with their employers. This might involve joining or forming a labor union, but the law also protects more informal activities that have the goal of protecting workers’ interests. Employers may not interfere with employees who are trying to exercise these rights, nor may they retaliate against employees who have engaged in protected activities. The National Labor Relations Board (NLRB) is responsible for investigating alleged violations of the federal labor rights statute. Its General Counsel (GC) may set certain policies for how the agency investigates and prosecutes charges of unlawful activity. In early October 2024, the GC issued a memo outlining her position that certain provisions in employment contracts, including non-compete agreements, violate federal law.
In a May 2023 memorandum, the GC defined a non-compete agreement as an agreement that “prohibit[s] employees from accepting certain types of jobs and operating certain types of businesses after the end of their employment.” Courts around the country have reviewed the validity and enforceability of non-compete agreements. They must balance an employer’s interest in protecting their business with an employee’s need for a job in their chosen career path.
While the specifics vary from one jurisdiction to another, most courts have held that non-compete agreements are enforceable when they have a limited scope in both duration and geography. A non-compete agreement that prohibits an employee from working for a competitor anywhere in the country for ten years, for example, would probably be unenforceable. It would prevent the employee from earning a living in their field of knowledge and experience. An agreement that only restricts competition within a twenty-mile radius of the employer for six months might be enforceable since it sets reasonable limits.
The GC takes the position that most non-compete agreements interfere with rights that are among those protected by Section 7 of the National Labor Relations Act (NLRA). In the May 2023 memorandum, she states that non-compete agreements “reasonably tend to chill
employees in the exercise of Section 7 rights.” Since non-compete agreements may appear to “deny [employees] the ability to quit or change jobs,” employees may feel they cannot safely discuss working conditions and other matters with one another.
In her recent memorandum, issued on October 7, 2024, the GC expands on the earlier memo by discussing potential remedies for unlawful non-compete agreements. She states that the harm may exceed direct financial losses. She describes non-compete agreements as “self-enforcing,” arguing that “employees may forgo certain opportunities out of fear of breaching their contractual obligations.”
She states that the rescission of a non-compete agreement is often not enough to remedy the harm it causes. She urges the NLRB to apply “make-whole remedies” to these types of cases, meaning remedies that “place employees in the same position, as nearly as possible, in which they would have been had the employer not maintained the unlawful provision.”
The GC’s basis for concluding that non-compete agreements violate the NLRA is similar to that of the Federal Trade Commission (FTC), which issued a rule effectively banning non-compete agreements throughout the country in April 2024. A court set that rule aside in August, barring its enforcement by the FTC.
If your employer has engaged in unlawful workplace practices and violated your rights in New Jersey or New York, a knowledgeable employment attorney can help you assert a claim for damages. Contact the Resnick Law Group today online or by calling 973-781-1204 or 646-867-7997 to schedule a confidential consultation.