New NLRB General Counsel Rescinds Multiple Memoranda to the Benefit of Employers

On February 14, 2025, NLRB acting General Counsel William B. Cowen rescinded multiple memoranda issued by former General Counsel, Jennifer Abruzzo.  Ms. Abruzzo left her position as GC at the NLRB on January 28, 2025.  During her tenure, Ms. Abruzzo issued several memoranda regarding employee rights under the NLRA.  President Trump appointed Mr. Cowen as Acting NLRB GC on February 3, 2025, shortly after which he issued GC 25-05 Rescission of Certain Counsel Memoranda.  Mr. Cowen served as an NLRB Member in 2002, and in his Memo, he addressed Ms. Abruzzo’s efforts to take on numerous NLRB issues, stating, “[t]he unfortunate truth is that if we attempt to accomplish everything, we risk accomplishing nothing.”

Mr. Cowen’s memo pulled back on many of the prior GC’s efforts, rescinding a number of memos which increased restrictions on and scrutiny of employers.  The rescission of these memoranda eases restrictions on employers with respect to severance agreements, non-compete agreements, and employee monitoring. 

Non-Compete Agreements – GC 23-08

Mr. Cowen rescinded a GC Memo by Ms. Abruzzo which took the position that restrictive covenant agreements violate Section 8(a)(1) unless narrowly tailored.  Ms. Abruzzo had argued that the denial of access to employment opportunities through restrictive covenant agreements chills employees from engaging in Section 7 activity because employees know that they will have greater difficulty replacing lost income if they are discharged for exercising statutory rights.  The rescinded memo broadly stated that employer non-competes violate employee rights where they chill employees from: 1) threatening to resign or demanding better working conditions; 2) carrying out concerted threats to resign or concertedly resigning to secure improved working conditions; 3) concertedly seeking or accepting employment with a local competitor to obtain better working conditions; 4) soliciting co-workers to work for a local competitor as part of a broader course of protected activity; or 5) seeking employment to specifically engage in protected activity with others at an employer’s workplace.

Ms. Abruzzo’s Memo did not specify any non-compete language that would violate employee rights relating to concerted activity. However, Ms. Abruzzo did instruct regions to seek make-whole relief for employees who could demonstrate lost opportunities for other employment, even absent conduct by an employer to enforce the provision.

Ms. Abruzzo’s memo left employers uncertain as to what language in a non-compete violated an employee’s protected rights. In rescinding Memo GC 23-08, Mr. Cowen reduced the risk that an employer may unwittingly violate an employee’s Section 7 rights through language in a non-compete agreement.

Electronic Monitoring – GC 23-02

Mr. Cowen rescinded a GC Memo from Ms. Abruzzo stating that employers who use electronic monitoring risk violating employees’ Section 7 rights.  Ms. Abruzzo’s Memo stated that employers risk violating Section 7 rights where they use data to manage employee productivity, discipline employees who fall short of quotas, penalize employees for taking leave, and provide individualized directives throughout the workday.

Ms. Abruzzo’s Memo stated that employers risk violating the NLRA by relying on artificial intelligence to screen job applicants or to issue discipline since the underlying algorithm could theoretically make decisions based on protected activity.  In addition, the memo stated that employers violate the NLRA where they fail to provide information about, and bargain over, the implementation of tracking technologies and related data. The Memo also stated that electronic monitoring of break times and surveillance of nonwork areas risk violating the law because the practices could prevent employees from exercising Section 7 rights.  Ms. Abruzzo also asserted that employers risk violating employees’ Section 7 rights when using AI to conduct personality tests on employment applicants and scrutinizing an applicant’s social media accounts.

The recession of GC 23-02 reduced a number of risks employers would have faced in implementing electronic monitoring and using AI to screen applicants.  Ms. Abruzzo’s Memo would have complicated the monitoring of operation of vehicles and the taking of unauthorized breaks.  In addition, with the advent of AI in the selection of candidates, an employer could unknowingly violate Ms. Abruzzo’s Memo through information collected while evaluating employment candidates.

Although employers must still use caution in using employee monitoring and/or AI to evaluate employees and employment candidates, the recission of this Memo allows employers greater freedom to explore these technologies.

Severance Agreements – GC 23-05

Mr. Cowen rescinded a GC Memo from Ms. Abruzzo offering guidance on the NLRB decision in McLaren Macomb, 372 NLRB No. 58, regarding severance agreements.  Ms. Abruzzo’s Memo essentially stated that non-disparagement clauses for non-supervisors were unlawful unless narrowly tailored to employee statements about the employer that are maliciously untrue. 

Under this interpretation, defamation clauses for non-supervisors would need to be limited to statements made with knowledge of their falsity or with reckless regard for their truth or falsity.

Ms. Abruzzo also stated that a savings clause will not cure non-disparagement clauses.

Although the NLRB’s decision in McLaren Macomb, including the bases for restrictions on non-disparagement provisions in severance agreements, remains, the recission of GC 23-05 may allow employers to draft broader non-disparagement provisions than indicated in Ms. Abruzzo’s Memo.

Cemex Case – GC 24-01

Mr. Cowen rescinded GC 24-01, which sought to aggressively enforce the NLRB’s decision in Cemex Construction Materials Pacific, LLC. Cemex addresses the standard of actions an employer must take when presented with a demand for recognition. GC 24-01 stated the following process would be applied if an employer neither recognizes the union upon demand nor files an RM petition within two weeks of the demand, and there is no other petition for a Board-conducted election being processed by the Region and the Union files an 8(a)(5) charge against the employer:

The employer will be permitted to challenge the basis for its bargaining obligation during the investigation of the unfair labor practice case. However, if majority support in an appropriate unit is demonstrated, the General Counsel will issue a complaint, absent settlement, and, if the Board agrees, it will find that the employer violated the Act by failing and refusing to recognize and bargain . . . employers act at their own peril in refusing to recognize and bargain and in making unilateral changes in employees’ terms and conditions of employment after such a demand is made.