Dear Nervous in Neenah, Federal agencies continue to target agreements that make employees think twice before switching employers. What was once a great employee-retention tool is quickly becoming a legal risk. The NLRB’s recent guidance regarding “Stay or Pay” provisions like training or hiring bonus repayment agreements, combined with growing scrutiny over non-compete clauses, marks a significant shift in the legal landscape. These changes are designed to protect employees’ rights under the National Labor Relations Act (NLRA) [1], so let’s dig into what you need to know to ensure your business stays compliant. [1] Most employees in the private sector are covered under the NLRA. The law does not cover government employees, agricultural laborers, independent contractors, and supervisors (with limited exceptions). What Are "Stay or Pay" Provisions?“Stay or Pay” provisions require employees to repay certain costs—such as training or signing bonuses—if they leave the company within a specific period. While these agreements have become more common, especially in industries with high turnover, they can now raise serious legal red flags under the NLRA. When Are "Stay or Pay" Clauses Presumptively Unlawful?According to the NLRB’s General Counsel, “Stay or Pay” agreements could be found unlawful if they are viewed as coercive or as restricting an employee’s right to freely change jobs or engage in collective bargaining under Section 7 of the NLRA. However, these clauses may still be valid if they meet the following criteria:
Why the Scrutiny?The NLRB has stepped up its focus on “Stay or Pay” agreements because of their potential to restrict employee mobility—which can have a chilling effect on employees’ rights to seek better employment opportunities or organize for improved working conditions. This crackdown is part of a broader effort to protect employees' rights under Section 7 of the NLRA, which guarantees employees the right to engage in collective activities for mutual benefit. What Should Employers Do?To ensure compliance with the new rules, here are some steps you can take:
Final ThoughtsNervous in Neenah, it’s crucial to review and, if necessary, revise your employee repayment agreements now to ensure they meet the NLRB’s new standards. Failure to do so could expose your business to significant legal risks, including unfair labor practice charges. As always, staying proactive is the best way to protect your business while respecting your employees' rights. If you need help reviewing or revising your repayment agreements, feel free to reach out. We can help you navigate these changes and ensure your business remains compliant. Warm regards, Attorney Bob P.S. Need help navigating labor law changes? Contact us at NextGen Legal for a thorough review of your employment agreements! About Attorney Bob
At NextGen Legal, we're transforming the traditional law firm model. Bob’s extensive experience in labor and employment law has been instrumental in shaping a service that offers both day-to-day legal counsel and rapid response for emergent issues. We strive to empower our clients with the knowledge and strategies necessary to navigate the legal landscape effectively and make confident employment decisions, without the fear of unexpected costs. Rated a Rising Star by SuperLawyers (an accolade reserved for only 2.5% of attorneys in Wisconsin), Bob provides strategic legal advice and counsel to companies of all sizes, helping business leaders make confident, informed decisions. His expertise spans employment law, regulatory compliance, litigation, safety, corporate strategy, and risk mitigation. Bob excels in transforming complex legal challenges into clear, actionable business solutions, offering strategic guidance to leadership teams. Disclaimer: Please note that the information provided above is for informational purposes only and should not be construed as legal advice on any subject matter and the scenarios presented in "At Your Service with Attorney Bob" are based on hypothetical fact patterns. The responses provided are for informational purposes only and should not be construed as legal advice on any subject matter. No recipients of content from this column, clients or otherwise, should act or refrain from acting on the basis of any content included in the column without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient’s state. The content of "At Your Service with Attorney Bob" and "Legal Alerts from Attorney Bob" contains general information and may not reflect current or subsequent legal developments, verdicts, or settlements. This content is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. Readers of this column are encouraged to seek out their own legal counsel for any specific legal concerns they may have. Alternatively, readers may reach out to Attorney Bob at NextGen Legal for specific legal guidance tailored to their unique situation. Contact information is as follows: Email: [email protected] Website: www.nextgenlegalsc.com We welcome your inquiries but urge you to make informed decisions regarding legal matters.
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