NLRB Signals More Employer-Friendly Approach to Non-Competes

On May 5, 2026, the National Labor Relations Board (NLRB) Division of Advice issued a memorandum in Biotricity, Inc., recommending dismissal of unfair labor practice charges challenging an employer’s non-compete agreement and related enforcement litigation. The memorandum signals a more employer-friendly approach to non-compete agreements under the National Labor Relations Act (NLRA), although employers must continue complying with applicable state-law restrictions.

The Division upheld the employer’s non-compete and confidentiality provisions and found that related litigation against former employees was lawful. It also noted that certain non-solicitation, non-disparagement, and similar restrictions may still present legal risks.

This guidance affects private-sector employers covered by the NLRA, including many non-union workplaces.

What Employers Should Do

Legal Requirements

• The memorandum does not create new employer compliance obligations. Employers must continue complying with applicable state laws governing non-compete agreements and existing obligations under the National Labor Relations Act (NLRA).

Practical Considerations

• Review restrictive covenant agreements, including non-compete, confidentiality, non-solicitation, and non-disparagement provisions, for compliance and appropriate scope.
• Carefully evaluate separation and post-employment agreements because certain restrictive covenant provisions may still face NLRB scrutiny.
• Consider consulting employment counsel, a Professional Employer Organization (PEO), or an Administrative Services Organization (ASO) when reviewing restrictive covenant compliance across multiple jurisdictions.

Overview

Non-Compete Agreements: The Division of Advice concluded that non-compete agreements generally do not violate the NLRA. The memorandum states that the General Counsel’s current view is that non-compete agreements do not, as a general matter, impact employees’ rights. The memorandum reflects the NLRB’s shift away from prior guidance that viewed many non-compete provisions as potentially unlawful.

Confidentiality Provision Found Lawful: The employer’s agreement defined confidential information broadly as information not generally known to the public and included examples such as payroll information, personnel information, and employee lists. Despite that broad language, the Division concluded that employees would reasonably understand the provision as protecting business information from competitors rather than restricting workplace discussions protected by the NLRA. The memorandum emphasized that the agreement contained numerous examples tied directly to the employer’s legitimate business interests in a competitive industry.

The Case: After two employees left to work for a competitor, the employer filed a lawsuit and pursued arbitration, alleging violations of contractual obligations and misuse of confidential information. The Division concluded that these enforcement efforts did not violate federal labor law because there was no evidence they were retaliatory, the claims were based on provisions the Division considered lawful, and the litigation did not involve conduct requiring primary NLRB jurisdiction.

Not All Restrictive Covenants Were Approved: Although the memorandum approved the non-compete and confidentiality provisions, it did not fully endorse all restrictive covenant language contained in the agreement; portions of the non-solicitation, third-party inducement, and non-disparagement provisions were unlawful under existing precedent. However, because the employer had not attempted to enforce those provisions, the allegations were dismissed without a final determination on their legality.

Continued Shift in NLRB Enforcement Policy: The memorandum represents the current enforcement approach following the rescission of prior guidance that had taken a more restrictive stance toward the use of non-competes and other restrictive agreements.

The decision suggests greater support for employers seeking to protect confidential information and enforce reasonable post-employment restrictions, while leaving some uncertainty regarding other forms of restrictive covenant language.

Why This Matters

The memorandum provides significant insight into how the current NLRB is likely to evaluate non-compete agreements, confidentiality provisions, and post-employment enforcement actions. Employers that rely on restrictive covenants to protect confidential information and competitive interests may view the decision as a meaningful reduction in federal labor law risk.

Key Risks for Employers

• Using non-compete agreements that do not comply with applicable state-law requirements.
• Relying on overly broad non-solicitation or non-disparagement provisions that may remain vulnerable to challenge.
• Pursuing enforcement actions without documented, legitimate business justifications.
• Restricting employee conduct that could qualify as protected concerted activity under the NLRA.
• Assuming current NLRB interpretations will remain unchanged in future administrations or Board decisions.

Source References

• NLRB – Advice Memos Page
• NLRB – Biotricity, Inc., Case 08-CA-326334

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