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Biden Prepares Executive Order to Limit Worker Non-Compete Clauses

— July 8, 2021

Biden had earlier suggested that non-compete clauses stifle innovation and keep people unemployed.

President Joe Biden is preparing an executive order that will instruct the Federal Trade Commission to curtail the widespread use of worker non-compete clauses and agreements.

“Roughly half of private sector businesses require at least some employees to enter noncompete agreements, affecting over 30 million people. This affects construction workers, hotel workers, many blue-collar jobs, not just high-level executives. He believes that if someone offers you a better job, you should be able to take it. It makes sense,” White House press secretary Jen Psaki said in a news release.

The expected order, says CNBC, will be part of a broader set of executive actions, all of which are intended to increase marketplace competition.

According to CNBC, the initial order is expected to be signed sometime within the coming days. It will fulfill the president’s “campaign promise to promote competition in labor markets.”

Biden, notes The Hill, advocated against non-compete agreements and other similar, competition-stifling arrangements when he was serving as Vice President of the United States under Barack Obama.

Man signing contract; image by Cytonn Photography, via
Man signing contract; image by Cytonn Photography, via

“We have the most dynamic, productive workers in the world, but they can’t reach their true potential without freedom to negotiate for a higher wage with a new company, or to find another job after they’ve been laid off,” Biden said in 2016.

In 2020, Biden said that non-compete agreements and similar arrangements “hinder the ability of employees to seek higher wages, better benefits, and working conditions by changing employers.”

Alongside limiting the use of non-compete agreements, Biden will also ask the Federal Trade Commission to ban “unnecessary” licensing requirements and restrictions.

“While occupational licensing can serve important health and safety concerns, unnecessary or overly burdensome licensing can lock people out of jobs,” Psaki said. This hugely affects military families in particular, over one-third of whom work in a field requiring a license and who are subject to military-directed moves every year.”

CNBC notes that Biden is also considering ways to prevent employers from sharing worker pay information in such a way as to negatively impact employees’ prospects of moving to better-compensated jobs.

That order, adds The Hill, would encourage the Federal Trade Commission and Department of Justice to strengthen antitrust guidance, preventing employers from working together to suppress wages in a particular field or industry.

Current guidance, observes The Hill, does not prohibit or restrict the ways in which employers exchange data with one another.

“The president believes that, in a healthy, competitive economy, employers must compete for workers and competition among employers gives workers more opportunity,” one inside source told The Hill.


Biden readies order to rein in worker non-compete clauses and make switching jobs easier

Biden to issue executive order to curtail noncompete clauses

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