NLRB Files Complaint Against Ridiculously Overbroad Non-Compete As An Unfair Labor Practice

We've been on this soapbox for over 15 years now. There are reams upon reams of evidence that the single greatest reason why California became the innovation hub that it became (in both Silicon Valley and Hollywood) was because it effectively outlawed non-compete agreements in the late 19th century. I have long been a vocal advocate for outlawing all non-compete agreements. The benefit is clear and the data is unquestionable. Non-competes are not just a tax on labor, it's a huge and damaging tax on innovation.

I was cautiously happy earlier this year that the Biden administration seems to agree, and the FTC has proposed banning non-competes entirely. My concern, though, is that this might go beyond the authority of the FTC itself. I'd much rather that Congress do this and pass a law instead.

In the meantime, though, the National Labor Relations Board (NLRB), seems to be taking a different path. Back in May, the NLRB's General Counsel released a memo saying that overbroad" non-competes could be seen as an unfair labor practice.

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."

And, now, the NLRB has acted on this. A new NLRB complaint against a spa in Ohio has charged the spa with unfair labor practices for its non-compete agreements. The complaint against Juvly Aesthetics quotes the company's non-compete agreement extensively (and it's quite a non-compete, as beyond just barring going to work for a competitor, it also includes a non-disparagement clause, and further bars an employee who does go somewhere else from soliciting" clients to follow them, including barring them from even responding to client questions about where they're working now). I mean... what the hell is this:

As part of your initial employment documentation, you signed a nonsolicitation and nondisparagement agreement that prevents you from communicating with the public, clients, or employees of Juvly/Contour Clinic beyond your termination, whether voluntary or involuntary. If you fail to comply with the following requirements, your actions will be considered a solicitation and/or tortious interference in which you will be liable pursuant to the above solicitation clause and any additional damages incurred by Juvly/Contour Clinic.

Do not contact any clients or notify them of your departure from Juvly/Contour Clinic.

Do not respond to any client questions regarding your employment status. You may only refer them to Juvly.com to book an appointment.

Should you choose to pursue work with any prior Juvly/Contour employee, retain all communications as this is considered a solicitation, their destruction is prohibited by law.

Do not discuss any information with any individual regarding your employment at Juvly/Contour Clinic.

Do not make any public statements to any party for any reason regarding Juvly employment, business practices, or treatment information.

That... pretty obviously, goes way beyond even a typical non-compete, so I can see why the NLRB chose to go after such an egregious form of a non-compete agreement. It's unclear if this will lead to further cases against more typical non-competes, even as good as that would be for the economy.

Still, it's good to see at least a little more recognition of how problematic non-compete agreements can be.