NLRB General Counsel Issues Memo on Non-competes Violating the National Labor Relations Act

Today, NLRB General Counsel Jennifer Abruzzo sent a memo to all Regional Directors, Officers-in-Charge, and Resident Officers, setting forth her view that the proffer, maintenance, and enforcement non-compete provisions in employment contracts and severance agreements violate the National Labor Relations Act except in limited circumstances. The memo explains that overbroad non-compete agreements are unlawful because they chill employees from exercising their rights under Section 7 of the National Labor Relations Act, which protects employees’ rights to take collective action to improve their working conditions. Specifically, these agreements interfere with employees ability to: 1. concertedly threaten to resign to secure better working conditions; 2. carry out concerted threats to resign or otherwise concertedly resign to secure improved working conditions; 3. concertedly seek or accept employment with a local competitor to obtain better working conditions; 4. solicit their co-workers to go work for a local competitor as part of a broader course of protected concerted activity; 5. seek employment, at least in part, to specifically engage in protected activity, including union organizing, with other workers at an employer’s workplace. “Non-compete provisions reasonably tend to chill employees in the exercise of Section 7 rights when the provisions could reasonably be construed by employees to deny them the ability to quit or change jobs by cutting off their access to other employment opportunities that they are qualified for based on their experience, aptitudes, and preferences as to type and location of work,” said General Counsel Abruzzo. “This denial of access to employment opportunities interferes with workers engaging in Section 7 activity in a number of ways—for example, workers know that they will have greater difficulty replacing their lost income if they are discharged for exercising their statutory rights to organize and act together to improve working conditions; their bargaining power is undermined in the context of lockouts, strikes and other labor disputes; and their social ties and solidarity leading to improvements in working conditions at workplaces are lost as they scatter to the four winds.” General Counsel Abruzzo explains that in some cases, noncompete agreements could be lawful if the provisions clearly restrict only individuals’ managerial or ownership interests in a competing business, or true independent-contractor relationships. Moreover, there may be circumstances in which a narrowly tailored non-compete agreement’s infringement on employee rights may be justified by special circumstances. The memo also notes that the General Counsel is committed to an interagency approach to restrictions on the exercise of employee rights, including limits to workers’ job mobility, including information sharing and referrals to other agencies. Last year, the NLRB entered into memoranda of understanding with the Federal Trade Commission and the Department of Justice’s Antitrust Division, both of which have addressed the anticompetitive effects of non-compete agreements.

Daily eBriefs - May 25, 2023

Employment A trial court erred in admitting evidence about activities that occurred before an employee filed his claim that his employer retaliated against him for filing an internal complaint with its Equal Opportunity Office; the court abused its discretion in admitting the internal complaints and supplements into evidence as they were hearsay. Kourounian v. California Department of Tax and Fee Administration - filed May 24, 2023, Second District, Div. Eight Cite as 2023 S.O.S. 1680 Full text click here >http://sos.metnews.com/sos.cgi?0523//B309007.

Daily eBriefs - May 24, 2023

A trial court erred in admitting evidence about activities that occurred before an employee filed his claim that his employer retaliated against him for filing an internal complaint with its Equal Opportunity Office; the court abused its discretion in admitting the internal complaints and supplements into evidence as they were hearsay. Kourounian v. California Department of Tax and Fee Administration - filed May 24, 2023, Second District, Div. Eight Cite as 2023 S.O.S. 1680 Full text click here >http://sos.metnews.com/sos.cgi?0523//B309007.

Daily eBriefs - May 22, 2023

Employment A report of unlawful activities made to an employer or agency that already knew about the violation is a protected “disclosure” within the meaning of Labor Code §1102.5(b). People ex rel. Garcia-Brower v. Kolla’s - filed May 22, 2023 Cite as 2023 S.O.S. 1629 Full text click here >http://sos.metnews.com/sos.cgi?0523//S269456

Region 31-Los Angeles Secures Settlement Agreement Requiring Star Garden to Reinstate and Bargain with Unlawfully Fired Dancers

May 18, 2023 Today, the NLRB’s Region 31-Los Angeles office conducted a ballot count for Dancers/Entertainers and DJs at 21st Century Valet Parking, LLC d/b/a Star Garden Enterprise (“Star Garden”), an adult entertainment venue in Los Angeles, California. The workers voted to be represented by Actors Equity Association 17-0. Star Garden must now begin bargaining in good faith with the union. On Tuesday, May 16, 2023, the Regional Director of Region 31 approved a settlement agreement between the parties resolving multiple unfair labor practice allegations, which were set for trial. Among other remedies obtained in the settlement, Star Garden agreed to take the following steps upon the anticipated granting of a motion to dismiss its bankruptcy proceedings: Reopen its business, and reinstate certain employees, placing others on a preferential hiring list; Pay backpay to employees; Immediately recognize the union and abide by a bargaining schedule with the union; And not refile for bankruptcy for one year (or Chapter 11 bankruptcy for 18 months). In addition, Star Garden agreed to post, distribute, and read a notice to employees about employee rights under the National Labor Relations Act and agreed to permit a Board agent to train its managers and supervisors about the National Labor Relations Act and unfair labor practices. “Workers have the right to take collective action for a safe and equitable work environment. I admire the dancers who had the courage to protest their unsafe working conditions,” said Region 31 Regional Director Mori Rubin. “I am also very pleased with the settlement and greatly appreciate the hard work of the Region 31 attorneys who investigated the case, handled bankruptcy matters, prepared for the trial, and pursued a settlement that would remedy the unfair labor practices.”

NLRB Division of Judges Releases 2023 Bench Book

May 12, 2023 Washington, D.C - The Judges Division of the National Labor Relations Board (NLRB) has issued an updated Bench Book, which replaces the last update issued in January 2022. The Bench Book serves as an NLRB trial manual and is designed to provide NLRB administrative law judges (ALJs) with a reference guide during hearings. It is also a useful tool for practitioners before the Board because it sets forth Board precedent and other rulings and authorities on certain recurring procedural and evidentiary issues that may arise during hearings. This year’s edition includes citations to numerous additional Board and court decisions. It also includes additional citations to helpful treatises on federal evidence and procedure that are available on either Westlaw or LEXIS. Finally, it includes several new sections, including a section on using special masters to address subpoena production disputes and a section on including non-disparagement and confidentiality provisions in settlement agreements. The 2023 edition was edited by ALJ Jeffrey Wedekind, who has served as editor since 2010, and ALJs Sharon Steckler and Mara-Louise Anzalone, as associate editors. It also includes a foreword by Chief ALJ Robert Giannasi describing the Bench Book’s history and purpose.

Daily eBriefs - May 1, 2023

Employment Triable issues of fact exist as to whether the ministerial exception applies to a discrimination claim by a Catholic school’s former art teacher and office administrator. Atkins v. St. Cecelia Catholic School - filed April 28, 2023, Second District, Div. Eight Cite as 2023 S.O.S. 1273 Full text click here >http://sos.metnews.com/sos.cgi?0523//B314220.

Board Returns to Traditional Standards for Evaluating Employee Misconduct During Protected Concerted Activity

Today, the National Labor Relations Board issued a decision in Lion Elastomers LLC II, overruling the prior Board’s decision in General Motors LLC 369 NLRB No. 127 (2020), and returning to the long-established “setting-specific” standards applicable to cases where employees are disciplined or discharged for misconduct that occurs during activity otherwise protected by the National Labor Relations Act. The General Motors Board had rejected those traditional standards, which focus on the severity of the employee’s misconduct and the context in which it took place. Instead, the prior Board adopted the Wright Line standard, which makes it easier for employers to sanction misconduct that takes place as part of protected activity. In overruling General Motors, the Board noted that labor disputes are often heated, as the Supreme Court has recognized. The Board reaffirmed the principle that employees must be given some leeway for their behavior while engaging in protected concerted activity, in order to safeguard their statutory rights. No federal court has ever rejected any of the three setting-specific standards. They are: (1) the Atlantic Steel test, which governs employees’ conduct towards management in the workplace; (2) the totality-of-the-circumstances test, which governs social media posts and most cases involving conversations among employees in the workplace; and (3) the Clear Pine Mouldings standard, which governs picket-line conduct. In its original decision, Lion Elastomers LLC, 369 NLRB No. 88 (2020), the Board had applied the Atlantic Steel test to find that the employer had violated the Act. After General Motors issued, the Board asked the United States Court of Appeals for the Fifth Circuit to remand the case so that the Board could determine the effect of its intervening decision. Today, consistent with its overruling of General Motors, the Board reaffirmed its original Decision and Order. “The General Motors decision broke sharply with judicially approved precedent and did not give adequate consideration to the importance of workers’ rights under the National Labor Relations Act,” said Chairman Lauren McFerran. “To fully protect employee rights, conduct during protected concerted activity must be evaluated in the context of that important activity—not as if it occurred in the ordinary workplace context.” Members Wilcox and Prouty joined Chairman McFerran in issuing the decision. Member Kaplan dissented.