Labor & Employment Blog

The new administration has quickly shaken up the National Labor Relations Board (NLRB). President Trump fired the NLRB’s general counsel, deputy general counsel, and a Democratic NLRB member that President Biden designated as chair of the Board in December of 2024. The general counsel’s removal was expected, as President Biden swiftly replaced the NLRB’s general counsel upon his inauguration. President Trump’s firing of the board member will be tested in court, as the former board member already has filed a lawsuit alleging she only could be removed for neglect or malfeasance. With only two members, the Board lacks a quorum and cannot exercise all its powers, including issuing decisions and regulations.

President Trump named the Board’s lone Republican member as its acting chair and appointed William Cowan, the regional director of the NLRB’s Los Angeles regional office, to be the NLRB’s acting general counsel. The general counsel investigates and prosecutes unfair labor practice cases and generally supervises the NLRB’s field offices which process cases. When President Trump names a new general counsel, the Senate will need to approve the appointment.

In the meantime, the acting general counsel rescinded nearly thirty memoranda his predecessor had issued. Cowan referred to an unsustainable backlog of cases and warned his team they “risk accomplishing nothing” if they “attempt to accomplish everything.” The acting general counsel’s maneuver signifies an important shift in federal labor policy. Some of the notable rescinded memoranda include:

Non-Compete Agreements (GC 23-08) – In 2023, the former general counsel instructed the NLRB’s Regional Directors and other representatives to initiate cases involving non-compete provisions that are “arguably unlawful” under the general counsel’s analysis. The memorandum announced the general counsel’s belief that non-compete agreements interfere with employees’ exercise of their rights under Section 7 of the National Labor Relation Act (the “Act”) to self-organize, form, join, or assist labor organizations, to bargain collectively, and to engage in other concerted activities for the purpose of other mutual aid or protection. The former general counsel took the position that “the proffer, maintenance, and enforcement” of non-compete provisions violate the Act by interfering with, restraining, or coercing employees in their exercise of their Section 7 rights.

The now-rescinded memorandum stated non-compete provisions reasonably tend to chill employees’ exercise of their rights when they could be construed to deny them the ability to quit or change jobs by limiting their access to other employment opportunities. The memorandum identified five types of conduct that non-compete provisions dissuade employees from engaging in:

(1)          concertedly threatening to resign to demand better working conditions because employees would view their threats as “futile”;

(2)          carrying out concerted threats to resign or otherwise concertedly resigning to secure improved working conditions;

(3)          concertedly seeking or accepting employment with a local competitor to obtain better working conditions;

(4)          soliciting co-workers to go work for a local competitor as part of a broader course of protected concerted activity; and

(5)          seeking employment, at least in part, to specifically engage in protected activity with other workers at an employer’s workplace.

Expansive Remedies for Unlawful Non-Compete Provisions (GC 25-01) – This memorandum urged the Board to award remedies “as fully as possible” against employers who use unlawful non-compete provisions. Described as “make-whole” remedies, the former general counsel explained relief should include the difference in compensation between the employee’s actual earnings and what an employee would have received from a better job opportunity the employee contends he or she was denied due to a non-compete provision. Even broader, according to the former general counsel, employees could recover for additional harms and costs related to complying with an unlawful non-compete provision. Examples include payment of lost wages during the time the worker was out of work and difference in pay and benefits received from a job that is outside the worker’s industry because he or she was prohibited from pursuing other job opportunities. Moving expenses and retraining costs are other types of make-whole relief the former general counsel urged the Board to award employees. The general counsel also pushed the Board to amend its standard notice posting to notify employees that they could receive compensation for difficulties experienced securing comparable employment and for being unemployed or underemployed, moving outside the provision’s geographic scope, and incurring retraining costs to become qualified for jobs in other industries.

This now-rescinded memorandum also provided the general counsel’s opinion that stay-or-pay provisions violate the Act by restricting employee mobility, making resignations financially difficult, and increasing employee fear of termination for engaging in protected activity. These stay-or-pay provisions can exist when an employer provides or pays for specific training, sign-on bonuses, or relocation stipends. The former general counsel recommended the Board find provisions that require employees to pay their employer if they separate from employment to be presumptively unlawful. Employers could rebut this presumption by carrying their burden on a four-factor test that focused on legitimate business interests and narrowness.

Severance Agreements (GC 23-05) – This memorandum provided the general counsel’s perspective on a recent Board decision called McLaren Macomb, which found employers violate the Act by conditioning an employee’s receipt of severance benefits on the employee waiving his or her rights under the Act. The Board concluded an employer’s mere offer of such an agreement violates the Act because it has a reasonable tendency to interfere with or restrain an employee’s future exercise of those rights.

The severance agreement in McLaren Macomb included a non-disparagement and confidentiality clause. The non-disparagement clause prohibited the employee from making disparaging or harmful statements towards the employer, its affiliates, and individual representatives. The confidentiality provision prevented the employee from disclosing the terms of the severance agreement to anyone other than a spouse or professional advisor.

In the memo, the general counsel answered a series of questions related to the McLaren Macomb decision. According to the general counsel, the mere proffer of a severance agreement that conditions benefits on a waiver of statutory rights violates the Act regardless of whether the employee signs the agreement. The general counsel stated the NLRB would apply the McLaren Macomb decision retroactively and encouraged employers to contact employees with severance agreements that violate the decision and notify them that the provisions are “null and void” and would not be enforced. The NLRB would not permit savings clauses in severance agreements to cure overly broad non-disparagement or confidentiality provisions.   

Electronic Monitoring (23-02) – This rescinded general counsel memorandum urged the board to find that employers presumptively violate the Act when their surveillance and “management practices” would tend to interfere with or prevent a reasonable employee from engaging in activity protected by the Act. The former general counsel wanted the Board to require employers to disclose to employees the technologies used to monitor and manage employees, the employers’ reasons for monitoring and management, and how the employers use the information they obtain through those efforts.

The new acting general counsel’s rescission of many memoranda is yet another step by the current administration to implement its labor policy agenda. Employers should be mindful of ongoing court challenges and vacancies that should be filled in the future, which may affect the agency’s direction even further. Please reach out to your Chamberlain Hrdlicka labor and employment attorney to remain informed and help ensure your compliance with the latest developments affecting your business.