Federal agencies have been busy with employment-related issues recently, with the National Labor Relations Board (NLRB) and Consumer Financial Protection Bureau (CFPB) announcing an alliance to address employer surveillance, the Federal Trade Commission (FTC) taking another action challenging an employer’s noncompete agreements and the NLRB issuing further guidance on severance agreements.
- NLRB, CFPB join forces. In a memorandum of understanding, the NLRB and CFPB established a formal partnership to address “practices that harm workers in the ‘gig economy’ and other labor markets.” According to the agencies, such practices include “employer surveillance, monitoring, data collection and employer-driven debt, which can include a worker going into debt with their employer for the purchase of equipment, supplies or required training.” The agencies said that the agreement would support their efforts to collaborate and recognize the intersection of acts and practices that may pose risks under the National Labor Relations Act (NLRA) and federal consumer financial protection law. Pursuant to the MOU, the NLRB and CFPB will share information, conduct cross-training for staff at each agency and partner on investigative efforts within each agency’s authority. “As our economy, industries and workplaces continue to change, we are excited to work with CFPB to strengthen our whole-of-government approach and ensure that employers obey the law and workers are able to fully and freely exercise their rights without interference or adverse consequences,” NLRB General Counsel Jennifer A. Abruzzo said in a statement.
- FTC stays focused on noncompetes. Continuing its crackdown on noncompete agreements—on the heels of its January proposal to ban their use by employers and its filing of legal action against three companies, seeking to force them to drop their noncompete restrictions—the FTC filed a new action against Anchor Glass Container Corp., which manufactures and sells glass containers used for food and beverage packing. According to the agency, Anchor Glass imposed “harmful” noncompete restrictions on more than 300 workers across a variety of positions, including salaried employees who work with the plants’ furnaces and forming equipment and in other glass production, engineering and quality assurance positions. The noncompetes contained a one-year term and included a prohibition on selling products or services to “any customers or prospective customers of Anchor with whom the worker had any interaction.” The FTC requested an order banning Anchor Glass from entering into, maintaining, enforcing, attempting to enforce or threatening to enforce noncompete restrictions on relevant workers, or from telling such workers or other employers that the employee is subject to a noncompete. In a consent order with the FTC, Anchor Glass agreed to comply with those restrictions; after a notice and comment period, the order will become final.
- Guidance from NLRB on severance agreements. In February, a divided Board held that offering an employee a severance agreement that includes confidentiality and non-disparagement provisions runs afoul of Section 8(a)(1) of the NLRA. To provide guidance in response to inquiries about the McLaren Macomb decision, NLRB General Counsel Jennifer A. Abruzzo issued Memo GC 23-05. She was careful to note that severance agreements are not banned, writing that “lawful severance agreements may continue to be proffered, maintained and enforced if they do not have overly broad provisions that affect the rights of employees to engage with one another to improve their lot as employees.” The opinion has retroactive effect, the memo said. The memo noted that including a savings clause in an agreement would not necessarily cure otherwise overbroad language, stating that “[w]hile a specific savings clause or disclaimer language may be useful to resolve ambiguity over vague terms, they would not necessarily cure overly broad provisions,” and provided an example of a lengthy and detailed disclaimer that an employer could include in its agreement. The memo further cautioned about other potentially problematic provisions, including no solicitation and no poaching clauses, broad liability releases and covenants not to sue that go beyond the employer and/or may go beyond employment claims and matters as of the effective date of the agreement, as well as requirements that a current or former employee cooperate with the employer in an investigation or litigation. The memo offered a suggestion for employers: “[W]hile it may not cure a technical violation of an unlawful proffer, employers should consider remedying such violations now by contacting employees subject to severance agreements with overly broad provisions and advising them that the provisions are null and void and that they will not seek to enforce the agreements or pursue any penalties, monetary or otherwise, for breaches of those unlawful provisions.” “That conduct could form the basis for consideration of a merit dismissal if a meritorious charge solely alleging an unlawful proffer is filed.”
To read the MOU between the NLRB and the CFPB, click here.
To read about the FTC’s action against Anchor Glass, click here.
To read Memo GC 23-05, click here.
Why it matters: Employers should be aware that common employment practices long considered noncontroversial, such as requiring noncompetes and offering severance agreements, are subject to heightened regulatory scrutiny.