A May memo from the National Labor Relations Board (NLRB) general counsel that argued most non-compete agreements violate federal law could make it easier for professional union activists to infiltrate American companies, experts told the Daily Caller News Foundation.
General Counsel Jennifer Abruzzo, appointed by President Joe Biden in 2021 and the top NLRB official in charge of investigating and prosecuting unfair labor practice cases, sent a memo on May 30 to regional directors informing them that non-compete agreements, which often prevent employees from seeking work in competition against their employer, are in most cases a violation of Section 7 of the National Labor Relations Act, signaling that the NLRB could bring litigation on the matter. In particular, Abruzzo said that non-competes unfairly restrict union activism, which experts told the DCNF takes away a key tool for employers to prevent the infiltration of “salts,” or employees who get hired at targeted companies primarily for the purpose of union activism.
“[Non-compete contracts] chill employees from seeking employment, at least in part, to specifically engage in protected activity with other workers at an employer’s workplace,” the memo argues. “In this regard, they effectively limit employees from the kind of mobility required to be able to engage in some particular forms of this activity, such as union organizing, which may involve obtaining work with multiple employers in a specific trade and geographic region.”
Austen Bannan, employment policy fellow with Americans for Prosperity, told the DCNF that the guidance empowers unions to organize more effectively in workplaces.
“It is fair to say that Abruzzo’s intent here is to open additional avenues of union activism at workplaces, putting union organizing above contract freedom,” Bannan said.
Rusty Brown, southern director at the Freedom Foundation and former policy advisor at the Department of Labor under the Trump administration, said the purpose of a non-compete agreement is to “curtail corporate espionage,” which Brown argues is what the activists are doing for the unions, in statements to the DCNF.
“[Salts’] entire job is to go in there and help organize the workforce… How is that any different than corporate espionage, which carries millions of dollars in penalties in prison?” Brown said. “[Unions] are, by any stretch of the imagination, a major corporation and yet they are free to conduct corporate espionage, send undercover employees to work for another company with the sole purpose of benefiting their own bottom line.”
The Biden administration, which appointed Abruzzo, has made a number of pro-union commitments before and during his presidential tenure. In 2020, President Biden pledged to “be the most pro-union president you’ve ever seen” the night before the election and has taken actions like an April 2021 executive order to investigate how to increase union membership.
Since that pledge, the Biden administration has pushed the Protecting the Right to Organize (PRO) Act, which has been criticized by Republicans as forcing unionization on workers who do not want to join a union or pay union dues. The bill would have removed workers’ ability to vote against unionization in secret ballot elections, would force non-union workers to pay dues and would nullify right-to-work laws that exist in 27 states.
Some argue that getting rid of non-competes would strengthen workers’ rights and encourage economic growth.
“Across industries and income brackets, non-competes are terrible for workers and a major drag on economic growth,” Democratic Connecticut Sen. Chris Murphy said in a press release promoting a bill to limit non-compete agreements introduced with Republican Indiana Sen. Todd Young. “It’s ridiculous we let companies hide behind these agreements as a means to depress wages and stave off competition.”
“Non-compete agreements stifle wage growth, career advancement, innovation, business creation, and human freedom. Our bill aims to remove these barriers and create opportunities that help, not hinder, Hoosier workers,” Young said.
Today is #Juneteenth, a day to celebrate emancipation while not losing sight of how far we have to go to secure full freedom and equality for all.
Today and every day you have the right to advocate with your coworkers for more racially equitable workplace policies. pic.twitter.com/BG5c2qsTxu
— NLRB General Counsel (@NLRBGC) June 19, 2023
Others, however, argue that non-compete agreements help businesses retain intellectual property.
David Osborne, fellow at the Institute for the American Worker, told the DCNF that non-competes are a valuable tool for businesses.
“Eliminating noncompete agreements would make it easier for union ‘salts’ to infiltrate American businesses; eliminating noncompete agreements would allow them to move more freely from business to business pushing unionization on other employees,” Osborne said. “But the more immediate effect is to put the government’s thumb on the scales of union organizers by removing a perfectly acceptable tool—noncompete agreements—that American businesses have long used to protect valuable intellectual property.”
As for how the efforts will affect workers, Osborne said that inevitably, “unionized employers will have to be less trusting of employees, less generous, and stricter about who receives access to valuable intellectual property, knowing that employees can immediately secure a job with their closest competitors at any time.”
The NLRB declined to comment to the DCNF.
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