/>iEmployers seeking to protect their business interests through non-competes scored another win recently. Permobil, Inc., a manufacturer of wheelchairs and wheelchair accessories, faced claims that it violated the National Labor Relations Act (NLRA) with an overly restrictive employment agreement.
The claim arose after Permobil sued Mark Westphal for violating the non-compete provision of his employment agreement. The provision barred former employees from working for competitors in the United States for one year. In addition, the employment agreement stated that workers cannot disclose confidential or proprietary information or disparage the company and its products.
National Labor Relations Board General Counsel Jennifer Abruzzo brought the matter before the NLRB, contending that a non-compete violated an employee's Section 7 rights under the NLRA by preventing the employee from voluntarily quitting to force their employer to meet their demands.
Administrative Law Judge Robert Giannasi conceded that there was no current board precedent that makes non-competes unlawful despite Abruzzo's Oct. 7, 2024, memo asserting her intention to request the NLRB to change the law. Determining such a change was “up to the Board, not me,” Giannasi held that the business reasons stated in the agreement were enough to protect its legality.
Based on current law, he found the non-compete did not violate the employee's Section 7 rights. In particular, he found, “Any Section 7 rights affected by employees agreeing not to be employed by a competitor is remote and, in any event, overridden by the language spelling out the business reasons for the ban.”
The judge also held that Permobil’s lawsuit to enforce the non-compete was lawful, saying it doesn’t involve any issues that would fall within the NLRB’s jurisdiction and isn’t driven by an unlawful motive to retaliate against Westphal.
This ruling was not a total win for employers, though, as the judge ordered Permobil to remove the provision that prevents employees from sharing details of the contract. Still, this ruling further shows that non-competes are finding increasingly more support for enforcement. Moreover, as it is anticipated that President-elect Trump will replace Abruzzo, employers should expect the NLRB's condemnation of non-competes to decrease or stop altogether.
"Any Section 7 rights affected by employees agreeing not to be employed by a competitor is remote and, in any event, overridden by the language spelling out the business reasons for the ban."
