{"id":9826,"date":"2026-02-15T15:55:40","date_gmt":"2026-02-15T15:55:40","guid":{"rendered":"https:\/\/usatrustedlawyers.com\/blog\/nlrb-gc-contends-stay-or-pay-arrangements-are-presumptively-unlawful-and-calls-for-make-whole-remedies-for-unlawful-non-competes\/"},"modified":"2026-02-15T15:55:40","modified_gmt":"2026-02-15T15:55:40","slug":"nlrb-gc-contends-stay-or-pay-arrangements-are-presumptively-unlawful-and-calls-for-make-whole-remedies-for-unlawful-non-competes","status":"publish","type":"post","link":"https:\/\/usatrustedlawyers.com\/blog\/nlrb-gc-contends-stay-or-pay-arrangements-are-presumptively-unlawful-and-calls-for-make-whole-remedies-for-unlawful-non-competes\/","title":{"rendered":"NLRB GC Contends \u201cStay-Or-Pay\u201d Arrangements Are Presumptively Unlawful and Calls for \u201cMake Whole\u201d Remedies for Unlawful Non-Competes"},"content":{"rendered":"\n
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On October 7, 2024, Jennifer Abruzzo, the General Counsel of the National Labor Relations Board (\u201cNLRB\u201d), issued a new memorandum<\/a> alleging that \u201cstay-or-pay\u201d agreements are presumptively unlawful under the National Labor Relations Act (\u201cNLRA\u201d) unless narrowly tailored, and urging the NLRB\u2019s Regional offices to significantly expand the remedies sought in connection with unlawful non-competes. This memorandum follows a memorandum<\/a> issued by the General Counsel in 2023 in which she expressed the view that most non-compete terms are unlawful under the NLRA. Importantly, these memoranda do not apply to executive or managerial employees, as the NLRA does not apply to supervisors.\u00a0<\/p>\n

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Proposed New Analytical Framework for Stay-or-Pay Terms and Proposed Remedies<\/h3>\n

Stay-or-pay agreements are terms that require an employee to pay back certain benefits (such as signing bonuses, training repayment agreement provisions (TRAPS), relocation expenses, or tuition and educational reimbursements) in the event the employee does not remain employed with the employer for a certain period of time. In this new memorandum, Abruzzo takes the position that stay-or-pay terms \u201cboth restrict employee mobility, by making resigning from employment financially difficult or untenable, and increase employee fear of termination\u201d and are therefore presumptively unlawful under Sections 7 and 8(a)(1) of the NLRA.<\/p>\n

According to the General Counsel, an employer may rebut that presumption \u201cby proving that the stay-or-pay provision advances a legitimate business interest and is narrowly tailored to minimize any infringement on Section 7 rights, that is, the provision:<\/p>\n

(1) is voluntarily entered into in exchange for a benefit;<\/p>\n

(2) has a reasonable and specific repayment amount;<\/p>\n

(3) has a reasonable \u2018stay\u2019 period; and<\/p>\n

(4) does not require repayment if the employee is terminated without cause.\u201d<\/p>\n

According to the General Counsel, if the stay-or-pay term was entered voluntarily with the employee, the \u201cemployer should be ordered\u201d to rescind and replace the unlawful provision, and\u00a0to undertake traditional make-whole remedies. The memorandum provides that if the stay-or-pay term was entered involuntarily, a \u201cmore robust remedy\u201d is \u201crequire[d],\u201d and the employee should be made \u201cwhole for any financial harms resulting from\u00a0.\u00a0.\u00a0.\u00a0attempted enforcement\u201d of a stay-or-pay clause.<\/p>\n

The memorandum acknowledges that it contains \u201cnew, specific requirements\u201d for stay-or-pay clauses, and accordingly, the General Counsel will \u201cgrant employers a sixty-day window,\u201d which began on October 7, 2024, to \u201ccure any preexisting stay-or-pay provisions that advance a legitimate business interest.\u201d Otherwise, the General Counsel will \u201cprosecute preexisting stay-or-pay arrangements . . . and seek retroactive application, absent extenuating circumstances.\u201d<\/p>\n

Proposed New Remedies for Unlawful Non-Competes<\/h3>\n

The new memorandum reiterates the General Counsel\u2019s view that unlawful non-compete agreements \u201cmay have a harmful financial impact on employee wages and benefits by explicitly restricting employees\u2019 job opportunities,\u201d or by creating financial burdens on employees, such as requiring them to \u201crelocate, take a lower-paying job rather than one in their field, or pay for training to qualify for a position not covered by the [non-compete] provision.\u201d<\/p>\n

To the extent the NLRB finds that an employer has maintained an unlawful non-compete provision, the General Counsel will seek to have the provision rescinded, and may also seek make-whole remedies designed to address \u201cthe harmful financial effects caused by current employees\u2019 and former employees\u2019 attempts to comply with the provision.\u201d Make-whole remedies may include, for example, the difference in compensation between what an employee earned at the employer and what they would have earned elsewhere absent the non-compete term, lost wages if an employee was out of work for longer than they otherwise would have been, or compensation in respect of any costs associated with complying with the non-compete, such as relocation or job training expenses.<\/p>\n

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Although the memorandum is not legally binding, it reflects the NLRB\u2019s enforcement priorities and views on non-compete and stay-or-pay agreements. To mitigate legal risks, employers should consider reviewing their existing employment agreements for compliance with this new guidance.\u00a0\u00a0<\/p>\n<\/p><\/div>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

On October 7, 2024, Jennifer Abruzzo, the General Counsel of the National Labor Relations Board (\u201cNLRB\u201d), issued a new memorandum alleging that \u201cstay-or-pay\u201d agreements are presumptively unlawful under […]<\/p>\n","protected":false},"author":1,"featured_media":9827,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[7465,3336,1378,369,2334,7466,4441,7237,2366],"class_list":["post-9826","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lawyers","tag-arrangements","tag-calls","tag-contends","tag-nlrb","tag-noncompetes","tag-presumptively","tag-remedies","tag-stayorpay","tag-unlawful"],"_links":{"self":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/9826","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/comments?post=9826"}],"version-history":[{"count":0,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/9826\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/media\/9827"}],"wp:attachment":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/media?parent=9826"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/categories?post=9826"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/tags?post=9826"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}