Please Release Me...Wait, What?

In my previous update I shared that my head was swimming. Well, copy that and add on a case of whiplash! On February 14th the Acting Secretary of the National Labor Relations Board (NLRB) issued a Valentine’s Day message to staff members rescinding many of the memoranda previously issued by his predecessor, some as recently as January 2025. Among other things, the new orders appear to minimize the NLRB’s efforts to limit non-compete provisions found in employment and severance agreements. While these orders don’t change current law, they will redirect the efforts of the agency. Read memo here.

The kinds of restrictions we are discussing here are murky and require that businesses understand their obligations and their limits both on a federal and a state level. The federal ban on non-compete agreements is in limbo. Four states have banned non-competes completely and 33 others have passed legislation regulating non-compete agreements.  Some states have placed restrictions on non-solicitation language.

Here in Ohio, a bipartisan group of lawmakers recently introduced a bill to “prohibit agreements that restrain engaging in a lawful profession or business after the conclusion of the employment relationship.” This bill contains expansive definitions of what explicitly should be prohibited and who exactly should be covered. While Ohio Senate Bill 11 has a number of steps to go before it reaches the Governor’s desk, I am thinking this is a good time for Ohio, and frankly all employers to review relevant language that has been incorporated into employment agreements, severance agreements, bonus plans, offer letters and employee handbooks. Given that the Ohio bill extends to independent contractors, these agreements should be reviewed as well.

The review suggested above may be led by your head of HR and should include at least the following six steps: 

·       revisit and re-affirm your unique business’s policies on competition, solicitation and confidentiality; 

·       identify and understand federal and state laws that regulate your business on the above topics;

·       collect and review relevant agreements and language contained in company documentation (including agreements that still may be in force with former employees);

·       determine if any changes are required now or will be necessary if the legal landscape changes;

·       consider any potential impact to your business and any potential employee relations implications of making changes identified above;

·       consult with employment counsel on the results of your analysis prior to making any changes to ensure compliance with existing employment and contract law.

Let’s also remember the importance of these topics during an M&A process. Through my HR due diligence work, I sometimes find that sellers don’t demonstrate a solid handle on restrictive language contained in employment and severance agreements or in handbooks, bonus plans etc.  These restrictions, if not compliant with current law, can rise to the level of a red flag or pose future liability for a buyer if not properly addressed.

The opinions expressed in this blog/article are those of Zieleniec HR Solutions, LLC.  We are not attorneys, and nothing expressed herein should be construed as legal, tax or accounting advice. We encourage our clients to consult with their business attorneys, tax advisors and/or accountants for advice in those areas.