On February 14, 2025, the National Labor Relations Board (“NLRB”) Acting General Counsel, William B. Cowen, issued Memorandum GC 25-05 (the “Memo”), rescinding several memoranda issued by previous General Counsel, Jennifer Abruzzo.
Of the memoranda rescinded, Mr. Cowen rescinded Memorandum GC 25-01, which pertained to non-compete agreements and stay-or-pay provisions in employment contracts.
In her previous article, Where Do Non-Competes Stand Under the Trump Administration?, KingSpry’s Employment Law Chair, Avery E. Smith, Esq., acknowledged the uncertain fate of non-compete agreements under the current Presidential Administration. In her latest update, she discusses Mr. Cowen’s actions and offers guidance to employers as it pertains to implementing and enforcing non-compete agreements moving forward.
Previous Guidance
On October 7, 2024, General Counsel, Jennifer Abruzzo, issued Memorandum GC 25-01, which established her position on non-compete agreements and other restrictive covenants in employment contracts. In short, she acknowledged the restrictive and harmful financial impact that unlawful non-compete agreements may have on employee wages and benefits. Ms. Abruzzo further discussed how stay-or-pay provisions may interfere with employee’s Section 7 rights under the National Labor Relations Act.
Now, under the Trump Administration and Mr. Cowen’s leadership, the actions taken by the NLRB may be shifting.
Impact on Employers
It is important to note that neither Ms. Abruzzo’s nor Mr. Cowen’s memoranda constitute law; however, they can be influential in shaping how the NLRB assesses and pursues complaints. Although advocacy for a nationwide ban on non-compete agreements has presumably subsided under the Trump Administration, employers should still consider the risks associated with implementing and enforcing restrictive covenants.
As we enter a new regulatory scheme under the Trump Administration, employers are encouraged to keep abreast of the ongoing complexities regarding the use of restrictive covenants and ensure that their enforcement of such provisions is narrowly tailored to advance legitimate business interests.
