NLRB: Employer must bargain with union about non-compete agreement

There's a lot of talk recently about employers requiring employees to sign non-compete agreements. Perhaps the low-paid clerk who makes your sandwich today has agreed not to work at any other business that sells “submarine, hero-type, deli-style, pita, and/or wrapped or rolled sandwiches” within two miles of any shop the employer runs. That's what fast-food franchisor Jimmy John’s has required, although they've stopped that practice – at least in New York State. Jimmy John’s Will Stop Making Low-Wage Employees Sign Non-Compete Agreements.

The NLRB also has something to say about all this. And it's pretty simple. If a company's employees are represented by a union, then the company probably has to bargain with the union before requiring employees to sign non-compete agreements.

In Minteq International, Inc. (364 NLRB No. 63, 07/29/2016) the employer had required employees to sign a non-compete, but had not first offered to bargain about that with the union. Zap! That was an unfair labor practice. The logic is pretty simple:

  • The non-compete agreement was a mandatory subject of collective bargaining. It has a clear and direct economic impact on employees, and is not among that class of managerial decisions at the core of entrepreneurial control that an employer is not required to bargain over.
  • The union did not waive its right to bargain.