NLRB judge says IT firm's noncompete agreement is legal

NTT Data

11/10/2024 19:14

By Daniel Wiessner
       Oct 11 (Reuters) - A National Labor Relations Board
administrative judge has ruled that IT services provider NTT
Data did not violate employees' rights under federal labor law
by requiring them to sign agreements not to compete with the
company or poach coworkers and clients. 
    The ruling on Thursday by Administrative Law Judge G.
Rebekah Ramirez in Detroit breaks with a judge in a different
case who said in the first ruling of its kind in June that a
similar agreement imposed by an HVAC company violated the
National Labor Relations Act. The five-member NLRB is reviewing
that decision. 
    NLRB General Counsel Jennifer Abruzzo, whose office
prosecutes cases involving alleged unlawful labor practices,
first argued last year that most noncompete agreements violate
workers' rights to organize and advocate for better working
conditions. 
    About 20% of U.S. workers, or 30 million people, have signed
noncompetes, according to the U.S. Federal Trade Commission,
which passed a rule this year banning the agreements nationwide.
A federal judge in Texas in August blocked the rule from taking
effect. 
    NTT, which is based in Tokyo and has U.S. headquarters in
Texas, and a lawyer for the company did not immediately respond
to requests for comment. 
    According to filings in the case, NTT required employees who
were laid off to sign a severance agreement that barred them
from performing the same services for NTT's customers,
soliciting other employees to quit or encouraging the company's
clients to cut ties with NTT for one year after their
termination.
    Abruzzo's office in a complaint issued last year claimed the
noncompete interfered with workers' rights to engage in activity
protected by the NLRA such as organizing a mass resignation to
protest working conditions or urging coworkers to join NTT's
competitors. Those claims mirrored the arguments Abruzzo had
made in 2023 memo arguing that noncompete agreements are
generally illegal. 
    But Ramirez on Thursday said NTT's agreement blocks
ex-employees from targeting the company's clients, but does not
completely prevent them from working for its competitors.
    "I do not find that an employee could reasonably interpret
this subsection as restricting them from discussing their terms
of employment, engaging in concerted activities to improve their
working conditions, or engaging in any other  NLRA  right," the
judge wrote.
    Ramirez ruled that NTT did violate the NLRA in other ways,
including by requiring workers to sign confidentiality
agreements that barred them from discussing their pay and
working conditions and releases that precluded them from taking
legal actions against the company. 
    The case is NTT Data Americas Inc, National Labor Relations
Board, No. 07-CA-320089.
    For NTT: Arrissa Meyer of Littler Mendelson
    For the NLRB general counsel: Matthew Ritzman
    
    Read more:
    Noncompete agreements violate US labor law, official says
    US labor board says work rules cannot hamper unionizing
    US judge strikes down Biden administration ban on worker
'noncompete' agreements
    U.S. labor board limits gag clauses in severance agreements
    

 (Reporting by Daniel Wiessner in Albany, New York)
 ((daniel.wiessner@thomsonreuters.com))