Following up on information sharing agreements entered into between the NLRB and the US Department of Labor Wage and Hour Division, and a second agreement between the NLRB and the EEOC, pertaining to claims for retaliation against workers who tried to pursue their claims under the legal rights under the anti-discrimination laws, earlier this week, on July 19, 2022, the NLRB also entered into a memorandum of understanding with the FTC, which oversees antitrust violations, ostensibly in order to foster information sharing in their common areas of interest, which, for our purposes, includes trying to curb the use of non-compete agreements where they unfairly impede workers from being able to move to better-paying jobs.
Here's the most relevant provision of the MOU:
“The FTC and the NLRB (each individually a “Party” and collectively, “the Parties”) recognize that continued and enhanced coordination and cooperation concerning issues of common regulatory interest will help to protect workers against unfair methods of competition, unfair or deceptive acts or practices, and unfair labor practices. Issues of common regulatory interest include labor market developments relating to the “gig economy” and other alternative work arrangements; claims and disclosures about earnings and costs associated with gig and other work; the imposition of one-sided and restrictive contract provisions, such as noncompete and nondisclosure provisions; the extent and impact of labor market concentration; the impact of algorithmic decision-making on workers; the ability of workers to act collectively; and the classification and treatment of workers.”
Predictably, the FTC chair lauded the new agreement, stating:
"We're committed to using all the tools at our disposal to promote free and fair labor markets in which companies must compete with each other to attract and retain workers,"
And, just as predictably, the US Chamber of Commerce, which touts itself as the world's largest umbrella business organization, castigated the move, saying this most recent articulation of a broader mission statement for the FTC "goes well beyond what is provided in law and what was envisioned by Congress."
What this Means – or May Mean
Apparently, notwithstanding that the DOJ was handed a stinging defeat in USA v. DaVita Inc. et al., where they sought to hold companies criminally liable under the antitrust laws for their use of noncompete agreements, it appears that these federal agencies are, at least for time being, forging ahead undeterred, trying to use whatever legal means they believe they have at their disposal to curb the use and enforcement of restrictive covenants. As a practical matter, this also means that it behooves employers to consider carefully which classes of employees are required to sign noncompete agreements as part of their employment, and, if some of those employees aren't a real threat to their legitimate business interests, whether it is really worth the risk of having them sign those agreements, on threat of being pursued by the federal government over those restrictive covenants.
