Biden Administration Asks Federal Trade Commission to Limit Restrictive Clauses in Recent Executive Order
Many of our recent blogs have focused on noncompete clauses in the workplace, particularly because of how prevalent noncompete clauses are in employment contracts and how limiting they can be on workers’ future career opportunities. We've discussed Noncompete Clauses Validity in Texas and Three Lesser-Known Complications of Noncompete Agreements in the Workplace — and it turns out our firm is not alone in our focus on these restrictive clauses.
The Biden Administration recently issued an executive order that addresses noncompete clauses, unnecessary occupational licensing, and disclosing worker pay information under certain circumstances.
Last Friday (July 9, 2021) President Biden issued an executive order that, among nearly 72 other provisions, calls on the Federal Trade Commission to adopt rules limiting the use of noncompete clauses.
White House Press Secretary Jen Psaki said earlier last week of noncompete clauses: “[R]oughly 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.”
White House Press Secretary Jen Psaki said earlier last week of noncompete clauses: “[R]oughly 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.”
Noncompete agreements affect over 30 million Americans, from high-level executives to construction workers.
Among the other provisions aimed at promoting economic competition is a limitation on unnecessary occupational licensing requirements, as nearly 30 percent of jobs in the U.S. require a license, and overly burdensome licensing can prevent people from getting jobs.
Biden will further encourage the FTC and the Department of Justice to work together to limit employers’ rights to share worker pay information in ways that could negatively impact workers looking for better paying jobs.
Whether these orders will withstand legal challenges remains to be seen, particularly given occupational licensing requirements and noncompete agreements are regularly determined by states and not the federal government. Supporters of noncompete agreements strongly believe they protect trade secrets and investments and will likely push back on attempts to prohibit them in the workplace.
Biden will further encourage the FTC and the Department of Justice to work together to limit employers’ rights to share worker pay information in ways that could negatively impact workers looking for better paying jobs.
Whether these orders will withstand legal challenges remains to be seen, particularly given occupational licensing requirements and noncompete agreements are regularly determined by states and not the federal government. Supporters of noncompete agreements strongly believe they protect trade secrets and investments and will likely push back on attempts to prohibit them in the workplace.
The Biden Administration has called upon the Federal Trade Commission to adopt rules limiting the use of noncompete clauses and has positioned them to draft the final language.
The Biden administration has positioned the FTC to draft the final language. FTC Chair Lina Khan has previously voiced support for federal rules restricting noncompete clauses, though, noting they “deter workers from switching employers, weakening workers’ credible threat of exit, and diminishing their bargaining power.”
Nonetheless, Biden’s executive order is a significant shift from current precedent.
Our firm will be keeping a close eye on further developments, so stay tuned for future posts discussing the impact of the orders and any legal challenges.
Nonetheless, Biden’s executive order is a significant shift from current precedent.
Our firm will be keeping a close eye on further developments, so stay tuned for future posts discussing the impact of the orders and any legal challenges.
Are you concerned about the noncompete clause in your employee contract?
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