In 2023, Chief Counsel for the National Labor Relations Board (NLRB), Jennifer Abruzzo, issued two memorandums addressing non-disparagement agreements, non-competes, and a variety of other contractual terms such as non-solicitation and non-poaching agreements, as the NLRB currently believes these violate section 7 of the NLRA, with narrowly construed exceptions. The bulk of the memorandums were directed at employer-to-employee conduct. Following these memorandums, the FTC issued its proposed regulation regarding non-competes which was subsequently overturned by a Texas court. While the FTC issue remains open-ended, as the government has indicated an intent to appeal this determination, the NLRB is zealously enforcing its new expectations in a variety of regions.

On September 12, 2024, the NLRB in Newark, New Jersey (Region 22) issued an Unfair Labor Practice complaint (ULP) based on employer-to-employer conduct. In this instance, the company at issue, a vendor, consistently included a no-poaching clause within its vendor agreements. Specifically, the company contracting with the vendor would not attempt to hire, solicit, or encourage any of the vendor employees to become employees of the company receiving the vendor’s services. In the complaint, the NLRB specifically states that provisions of this type, including the one in the vendor’s contract, “interfere with, and are inherently destructive of, workers’ rights under Section 8(a)(1) and (3) of the National Labor Relations Act.” 

This is somewhat of a departure from prior employer concerns and many state statutes which focus exclusively on the agreement between the employer and the employee. This ULP broadens employer concerns to include vendor contracts and pulls in potential antitrust issues when companies are limited in the worker pool where they can recruit or hire.  This has been addressed by FTC/DOJ prior guidance to HR professionals and issues of anti-trust.

Bottom Line

Employers need to be aware of the NLRB’s position as outlined in the 2023 memos regarding no poaching agreements when drafting any contracts or assessing claims. Contact your Dentons employment lawyer to discuss what this could look like in your business and how to practically implement potential changes.

Related Resources:

• The Federal Trade Commission Says No to Non-Competes
• FTC Proposes Nationwide Ban on Most Noncompetes
• FTC Non-Compete Rule is Blocked by Federal Court in Texas
• NLRB General Counsel Issues Memo on Non-competes Violating the National Labor Relations Act – NLRB May 2023 Memo