Many employers were encouraged when a federal court in Texas last month blocked the enforcement of a Federal Trade Commission (FTC) prohibition against essentially all noncompete employment agreements in Ryan v. Federal Trade Commission. The FTC proposed rule would have required employers to provide notice to workers that any noncompetes would not be enforced and that the worker was free to seek or accept a job with a competitor. While the FTC is currently precluded from enforcing an across-the-board prohibition on noncompetes, the FTC has signaled its intent to individually target any noncompetes that it maintains are in violation of antitrust laws.

Now, another agency, the National Labor Relations Board (NLRB), has entered the fray. Expanding on her prior guidance from May 2023, the NLRB's general counsel, Jennifer Abruzzo, issued a guidance memorandum outlining the agency's objectives regarding non-compete agreements and stay-or-pay agreements. While the NLRB governs union-management relations and concerted conduct in the workplace, Abruzzo has indicated it is her belief that many noncompetes violate federal labor laws regardless of whether the workforce is unionized. How did the NLRB get here and what are the takeaways for employers?