10-30-2024
Jennifer Abruzzo, NLRB’s General Counsel, believes some “stay or pay” provisions infringe on employees’ rights. She outlined her reasons in a non-binding memorandum. An employment-related stay or pay provision requires an employee to compensate their employer if they leave their job within a certain period. Employers write these provisions in employment offers and agreements. Examples of these reimbursements include sign-on or relocation bonuses, educational repayment contracts, and training repayment agreement provisions. Abruzzo asserts these provisions, much like non-complete clauses, restrict employee mobility. They impose financial barriers to quitting and chill an employee's participation in NRLA-protected concerted activities because termination of their jobs would trigger the required payment. As such, the provisions may violate the NLRA unless an employer narrowly tailors them to minimize interference with an employee's Section 7 rights.
Employers have until December 6 to cure any defects. Abruzzo provides a proposed framework to assess the legality of any such provision. For the stay or pay provision to be legal, it must a) be fully voluntary and for a benefit unrelated to mandatory training; b) include a reasonable and specific repayment amount noted in advance and no more than the employer's cost; c) include a reasonable "stay" period relative to the benefit given and an employee's income; and d) not require repayment if the employer fires the employee without cause. This memorandum gives employers an indication of what the NLRB might decide in cases before it. The GC will not pursue "stay or pay" provisions that employers cure before the deadline. Abruzzo stated she would seek significant make-whole remedies and plans to solicit details about any provisions from all employees when challenged.