Labor & Employment Developments Blog

On February 14, 2025, National Labor Relations Board (NLRB) acting General Counsel William B. Cowen rescinded several memoranda issued by the former NLRB General Counsel Jennifer Abruzzo. The rescinded memoranda include, GC 21-06 and GC 21-07 addressing remedies to be sought; GC 21-08 on the rights of student-athletes under the National Labor Relations Act (NLRA); GC 23-02 on electronic monitoring; GC 23-05 on severance agreements; and GC 23-08 and GC 25-01 on non-compete agreements. The rescission of GC 23-5, GC 23-08 and GC 25-01 is significant for employers that use non-compete agreements in their employment or severance agreements.

• GC 23-08 provided that, except in limited circumstances, “the proffer, maintenance, and enforcement” of non-compete provisions in employment and severance agreements violate Section 8(a)(1) of the NLRA.
• GC 25-01 provided that non-compete agreements and certain “stay-or-pay” provisions – provisions that require an employee to reimburse their employer if they separate from employment; infringe on employees’ Section 7 rights and violate Section 8(a)(1) of the NLRA “unless narrowly tailored to minimize the infringement.”
• GC 23-5 provided that employers violate the NLRA when they offer employees severance agreements that require employees to broadly waive their rights under the Act.

Although these memoranda were not binding law, they nevertheless had legal significance because they painted the legal landscape and informed the NLRB on how to interpret and enforce the NLRA moving forward. Likewise, Cowen’s rescission of these memoranda is significant for employers that use non-compete provisions because it lays the groundwork for a new era of labor policy.

While the General Counsel’s memorandum is not binding law, the rescission arguably offers employers more latitude to implement and enforce non-compete provisions without the same level of legal scrutiny. However, the rescission does not overturn McLaren Macomb and Stericycle, Inc..

The Board in McLaren Macomb, held that employers may not offer employees severance agreements that require employees to broadly waive their rights under the NLRA. In Stericycle Inc., the Board issued a decision adopting a new legal standard for evaluating employer work rules challenged as facially unlawful under Section 8(a)(1) of the NLRA. Under the Stericycle standard, a rule is presumptively unlawful once the General Counsel proves that a challenged rule has a reasonable tendency to chill employees from exercising their Section 7 rights. These two decisions are still enforceable and will take a decision from the NLRB to overturn.

Furthermore, Cowen’s rescission does not apply to other restrictive covenants such as confidentiality and non-solicitation provisions.

Thus, employers should proceed with caution on the issue, especially given the conflicting decisions regarding non-compete agreements by the various NLRB administrative law judges, whereby some have adopted the former NLRB General Counsel’s position concerning the legality of non-compete agreements, while others have held that the former GC’s position does not comply with existing law, and thus cannot be enforced until adopted by the Board.

So why did Cowen issue this memorandum and why should you care? Cowen’s memorandum establishes the landscape for the current Board and gives employers a glimpse as to how non-compete agreements may be viewed by the agency moving forward. It is anticipated that this Board will take a less aggressive approach when it comes to scrutinizing restrictive covenants and interpreting and applying the NLRA. However, there is still binding Board precedent that needs to be reversed prior to seeing major changes locally. However, it is unlikely that the newly established Board will rule in a manner that is inconsistent with this rescission. Accordingly, employers should continue to use restrictive covenants that are narrowly and reasonably tailored to protect their legitimate business interests in order to be in compliance with state laws.  

Employers should continue to monitor and keep abreast of updates and seek guidance from their legal representative. For further questions, please contact a member of the KMK Law Labor & Employment Law Group.