NLRB Targets Non-Compete Agreements
Adminby Elizabeth E. Hogue, Esq.
The National Labor Relations Board (NLRB) has now joined the Federal Trade Commission (FTC) and some state legislatures to target non-compete agreements. The general counsel for the NLRB argued in a recent memo that non-compete agreements violate the National Labor Relations Act because they interfere with employees’ right to engage in protected concerted activity. Two recent actions by the Board provide more information about efforts of the NLRB to limit use of non-compete agreements.
Juvly Aesthetics Non-Compete Agreement Settlement
In February of 2024, the regional office of the Board in Cincinnati approved a settlement agreement between Juvly Aesthetics and three former employees. The Board claimed that Juvly, an operator of medical clinics, violated the rights of employees through the use of confidentiality, non-disparagement, non-competition, non-solicitation and requirements to repay training expenses under certain conditions.
According to the NLRB, Juvly prohibited employees from discussing their rates of pay. The Company also required some employees to sign a non-compete agreement that was in effect for a period of twenty-four months for any competing medical practice within twenty miles of any location of the Company.
Juvly agreed to a settlement agreement that required:
- Payment of back pay to some employees
- Termination of unlawful policies and procedures
- Release of employees from unlawful agreements
- Posting of all of requirements of the settlement agreements for review by employees
NLRB Division of Advice
In December, the NLRB Division of Advice issued guidance that evaluated the legality of these issues:
- Customer non-solicitation provisions do not violate the Act because they only prevent employees from soliciting existing customers for one year so that employees are likely not barred from other employment opportunities for more than one year.
- Confidentiality agreements do not violate the Act because they prohibit only disclosure of trade secrets, marketing plans, customer lists, and other proprietary information, as opposed to information that could involve employee activity regulated by the Act, such as wage information.
- Provisions requiring the return of company property do not violate the Act.
Providers are now clearly operating in an environment that prohibits employers from restricting employee activities that were fair game in the past. The specifics of efforts to limit the actions of employers remain unclear, but will likely be “fleshed out” in enforcement actions.
©2024 Elizabeth E. Hogue, Esq. All rights reserved.
No portion of this material may be reproduced in any form without the advance written permission of the author.
©2024 by The Rowan Report, Peoria, AZ. All rights reserved. This article appeared in Healthcare at Home: The Rowan Report. Reproduction by permission only.
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