NLRB Judge Upholds Non-Compete Agreement, Signaling Continued Support for Employer Protections

This article is from The National Law Review: https://ow.ly/tns650UBuMV In a noteworthy win for employers, a National Labor Relations Board (NLRB) judge recently upheld a non-compete agreement, signaling that such provisions remain enforceable under current law—at least for now. The case involved Permobil, Inc., a manufacturer of wheelchairs and accessories, which had included a one-year non-compete clause in its employment agreement. The clause prohibited former employees from working for competitors anywhere in the United States for 12 months following their departure. Additionally, the agreement contained confidentiality and non-disparagement provisions.

When former employee Mark Westphal was sued for violating the non-compete, the NLRB’s General Counsel, Jennifer Abruzzo, brought the matter before the Board. Abruzzo argued that the agreement infringed on employees’ rights under Section 7 of the National Labor Relations Act (NLRA)—specifically, the right to quit as a means of pressuring an employer for better working conditions.

What the Judge Decided

Administrative Law Judge Robert Giannasi dismissed Abruzzo’s claim, holding that no existing NLRB precedent deems non-compete agreements inherently unlawful. He stated that any such change would have to come from the Board itself, not from an administrative judge.

Crucially, the judge found that:

• The business justifications outlined in Permobil’s agreement were legitimate and sufficient to support the non-compete clause.

• Any impact on Section 7 rights was “remote” and outweighed by those business reasons.

• Permobil’s lawsuit to enforce the non-compete was not retaliatory, and therefore did not fall under the NLRB’s jurisdiction.

However, the ruling wasn’t a complete victory for employers. Judge Giannasi ordered Permobil to strike a provision in the contract that prohibited employees from disclosing the terms of the agreement, reinforcing the idea that workers must be free to discuss workplace terms and conditions.

What This Means for Employers

This case highlights several important takeaways:

• Non-compete provisions are still enforceable, especially when employers can articulate a clear and legitimate business interest.

• The NLRB has not yet banned non-competes, despite the General Counsel’s public stance against them.

• Confidentiality clauses must be carefully drafted to avoid infringing on workers’ rights to discuss terms of employment.

Looking ahead, changes in leadership may also affect how aggressively the NLRB pursues non-compete enforcement. With President-elect Trump expected to replace General Counsel Abruzzo, many expect the Board’s opposition to non-competes may soften or stall entirely.

Final Thoughts

Employers using non-competes should take this ruling as a sign that, for now, well-drafted agreements are defensible under federal labor law. However, contracts should be reviewed regularly to ensure compliance with evolving legal standards—especially around employee rights and enforceability limits.

If your organization uses or is considering a non-compete policy, now is a good time to consult with legal counsel to make sure your agreements are legally sound, business-driven, and fairly balanced.