On June 26, 2026, the National Labor Relations Board's Division of Advice issued a memorandum continuing the reversal of the prior administration's position that overbroad non-compete agreements, standing alone, violate employees' rights under Section 7 of the National Labor Relations Act. The memo confirms a materially narrower federal labor-law posture toward restrictive covenants and provides useful guidance for employers evaluating their existing agreements and drafting new ones.
The prior enforcement approach had taken the view that overbroad non-competes could, by themselves, chill protected concerted activity and therefore run afoul of the NLRA. The new memorandum steps away from that framework, signaling that non-compete agreements will not generally be treated as inherent violations of Section 7. For employers, the practical effect is a meaningful reduction in NLRA-based exposure tied to the use of non-competes, particularly for standard restrictive covenants tied to legitimate business interests such as the protection of confidential information, customer relationships, and specialized training.
Employers should not, however, read this development as a green light to broaden or standardize aggressive non-compete practices across their workforces. The federal labor-law risk has narrowed, but it has not disappeared entirely, and non-compete agreements coupled with other restrictive language or coercive conduct may still draw scrutiny in appropriate cases. The Division of Advice's position also reflects current enforcement priorities, which can shift with future administrations or Board composition.
More importantly, state-level restrictions on non-competes continue to tighten independently of federal labor law. A growing number of jurisdictions have imposed wage thresholds, notice requirements, occupational carve-outs, and outright prohibitions on certain categories of non-compete agreements. Because these state regimes vary widely and evolve quickly, they now represent the primary compliance concern for most employers using restrictive covenants. Any national template must be tested against the law of each jurisdiction in which the employer operates.
Employers reviewing their restrictive covenant programs should consider updating template language, confirming that agreements are narrowly tailored to protectable interests, and calibrating use of non-competes by role and geography.
This article is provided for general informational purposes only and does not constitute legal advice. Clients should seek tailored counsel regarding their specific circumstances.