A labor board official in the United States declared on Tuesday that the requirement for workers to sign noncompete agreements, preventing them from joining

competing companies, is typically illegal. This marks the latest effort by government regulators to curb the practice.

Jennifer Abruzzo, the General Counsel of the National Labor Relations Board (NLRB), stated in a memo to agency lawyers that these "noncompete agreements" discourage workers from exercising their rights under US labor law to advocate for improved working conditions.

Abruzzo, who was appointed by Democratic President Joe Biden, stated in Tuesday's memo that noncompete agreements violate labor law "unless the provision is narrowly tailored to special circumstances justifying the infringement on employee rights."

Specifically, such agreements could impede workers from resigning or threatening to do so to demand higher wages or other workplace improvements, as mentioned in Abruzzo's memo.

However, the agreements may still be considered lawful if they only restrict individuals' ownership interests in a competing business, according to Abruzzo's statement.

As the NLRB general counsel acts as a prosecutor and brings unfair labor practice cases to the separate five-member board, which currently holds a Democratic majority, this statement carries significant weight.

In January, the US Federal Trade Commission proposed a rule that would prohibit companies from requiring workers to sign noncompete provisions. The proposal is currently pending.

An academic study conducted in 2021 revealed that approximately 18% of US workers were subject to noncompete agreements. This figure included over 13% of workers earning less than $40,000 per year.

While California, Oklahoma, and North Dakota have already banned noncompete agreements, approximately a dozen other states have passed laws that limit their use.

Business groups argue that noncompetes are essential for protecting trade secrets and promoting competitiveness. However, many Democrats and worker advocates argue that these agreements suppress wages and hinder worker mobility.

Abruzzo has requested agency lawyers to forward cases to her office that involve potentially unlawful noncompete agreements. Her office could utilize one of these cases to petition the board to restrict or prohibit the use of noncompetes. Photo by National Labor Relations Board, Wikimedia commons.