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NLRB Says Employee Non-Solicitation Agreement Does Not Violate Federal Labor Law

    Client Alerts
  • November 02, 2012

Chalk one up for employers! After a series of recent decisions calling into question the legality of standard employment policies, last week the National Labor Relations Board issued a directive to regional offices concluding that employee non-solicitation agreements do not violate Section 7 of the National Labor Relations Act. These common agreements prohibit employees from interfering with the employment relationship between the company and other employees, or from soliciting them to work for another company during employment and for a period of time following the signatory's departure from employment.

The directive arose as a result of questions posed to the NLRB relating to the legality of a Charles Schwab agreement that prohibits employees from inducing or soliciting other employees to leave their employment. The inquiry claimed that this agreement prohibits employees from engaging in protected concerted activity such as discussing terms and conditions of employment that could lead an employee to depart employment with Schwab.

The NLRB disagreed. The non-solicitation agreement itself makes no mention of prohibiting any concerted activity. Mere solicitation of employees to leave their employment with the employer is not a protected activity under the NLRA. The NLRB found no evidence that Schwab used the agreements to deter unionization activity. The Board accepted the employer's assertion that the agreements are necessary to protect business and client relationships from unfair competitive activities.

A contrary position would have raised questions over the legality of standard employment contracts and post-employment restrictions. For now, the NLRB appears to have drawn a line between employment policies that regulate on the job conduct, and those which primarily address post-employment competitive activities.