On October 7, 2024, the National Labor Relations Board (NLRB) issued a memo on “Remedying the Harmful Effects of Non-Compete and ‘Stay-or-Pay’ Provisions That Violate the National Labor Relations Act.” This memo expanded on its May 2023 memo which stated that overbroad non-compete agreements are unlawful because they chill employees from exercising their right to take collective action to improve their working conditions, as guaranteed by Section 7 of the National Labor Relations Act. The new memo lays out the intent to not only prosecute employers who require that their employees sign non-compete and “stay-or-pay” provisions, but also to remedy the harmful monetary effects employees experience as a result of these provisions. This includes assessing the lawfulness of:
The memo also explains the circumstances under which employers can cure pre-existing stay or pay arrangements to avoid prosecution.
For more information, see the NLRB memo or press release.