Non-Compete Agreement Is Subject of Mandatory Bargaining.


The U.S. Court of Appeals for the D.C. Circuit held that a unionized company’s unilateral implementation of a mandatory non-compete agreement for new employees violated the National Labor Relations Act, because it was a mandatory subject of bargaining with the union.

The court in Minteq Int’l, Inc. and Specialty Minerals, Inc. v. NLRB noted that non-competes are a subject of mandatory bargaining because they have a direct economic impact on employees, by imposing a cost in the form of lost employment opportunities and “restricting their ability to benefit from their discoveries, inventions, and acquired knowledge.” Nonetheless, the employer argued that it had no bargaining duty because its broadly-worded management rights clause, contained in the Collective Bargaining Agreement (CBA), constituted the parties’ resolution of the matter. The court disagreed, noting that there was nothing in the language that specifically addressed management’s ability to effectuate post-employment restrictions.

In addition, the court deferred to the National Labor Relations Board’s determination that a provision barring the employee from soliciting a customer or supplier to terminate or otherwise alter its relationship with the company violated the NLRA (a standard provision found in many non-compete agreements). The Board had stated that such provision could be construed to interfere with employees’ rights to appeal to customers to boycott the company in support of a labor dispute.