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On February 14, National Labor Relations Board (NLRB) Acting General Counsel William Cowen rescinded several memoranda issued by the former General Counsel during the Biden Administration. Among the memoranda rescinded include:

  1. (Canceled) GC 23-02 Electronic Monitoring and Algorithmic Management of Employees Interfering with the Exercise of Section 7 Rights. This memorandum summarized the ways in which electronic surveillance and management violate employee rights under the National Labor Relations Act (NLRA). In addition, the memo urged a new framework for protecting employees from intrusive or abusive forms of electronic monitoring and automated management that interfere with employees’ rights to organize and engage in protected concerted activity. The memorandum urged the NLRB to find that an employer has presumptively violated Section 8(a)(1) of the NLRA where the employer’s surveillance and management practices, viewed as a whole, would tend to interfere with or prevent a reasonable employee from engaging in activity protected by the NLRA. Even when the employer’s business needs justified electronic surveillance, the memorandum called for employers to disclose to employees the technologies it uses to monitor and manage them, its reasons for doing so, and how it is using the information it obtains – unless the employer could demonstrate special circumstances requiring covert use of technologies.
  2. (Canceled) GC 23-05 on Severance Agreements. In this memorandum, the General Counsel took the position that employers violated the NLRA when they even offer a severance agreement to employees that required the employees to broadly waive their rights under the NLRA. Thus, severance or separation agreements containing non-disclosure and non-disparagement clauses violated the National Labor Relations Act. Under the memo, only non-disclosure provisions prohibiting the disclosure of proprietary or trade secret information were considered lawful. Further, a non-disparagement agreement would be considered lawful only if it prohibited legally defamatory statements.
  3. (Canceled) GC 23-08 on Non-Compete Agreements. In this memorandum, the General Counsel took the position that non-compete agreements violate the NLRA unless they were narrowly tailored. A non-compete provision was overbroad if could be “reasonably construed by employees to deny them the ability to quit or change jobs by cutting off their access to other employment opportunities that they are qualified for based on their experience, aptitudes, and preferences as to type and location of work.” The memo declared that a desire to avoid competition from a former employee is not a legitimate business interest that could justify the chilling effect on employees’ rights under the NLRA. The memo also stated that retaining employees or protecting special investments in training employees are unlikely to ever justify an overbroad non-compete provision.
  4. (Canceled) GC 25-01 on Stay or Pay Provisions. The memorandum identified stay or pay provisions as agreements that require employees to repay the costs of training, education, sign-on bonuses, or that require employees to pay their employers if they voluntarily or involuntarily leave within a specified timeframe. The General Counsel declared that such stay or pay agreements violate the NLRA unless they are narrowly tailored. The memorandum declared that only provisions that seek to recover the cost of optional benefits should be permissible. Under the memorandum, a stay or pay provision would be considered lawful only if it (1) is voluntarily entered into in exchange for a benefit, (2) has a reasonable and specific repayment amount, (3) has a reasonable stay period and (4) does not require repayment if the employee is terminated without cause.

Although the now rescinded memoranda did not apply to managerial level employees, they presented considerable challenges to the way businesses had operated for years and created a high degree of uncertainty. Many employers will no doubt welcome the Valentine’s Day bouquet from Acting General Counsel Cowen.

Stay tuned for more updates as the pendulum continues to swing.