Biden Issues Executive Order to Restrict Noncompete Agreements

On July 9, 2021, President Joe Biden issued a sweeping Executive Order on Promoting Competition in the American Economy, which tasks the Federal Trade Commission (FTC) and other federal agencies to ban or limit noncompete agreements, which restrict where an employee can work after leaving a job. The White House claims that such agreements reduce wages by making it more difficult for workers to find better-paying jobs. 

First, the executive order aims to establish a White House Competition Council, headed by the Assistant to the President for Economic Policy and the Director of the National Economic Council. This council will meet on a semi-annual basis to advance policies to promote a competitive economy, higher-earning positions, and the ability for workers to switch jobs and negotiate better pay and workplace conditions. 

Next, the order directs the leaders of all federal agencies, including the Secretary of the Treasury and the Secretary of Labor to enact and enforce rules to further employee mobility and free-competition efforts. The FTC and the Justice Department are also tasked to strengthen antitrust rules to discourage employers from working together to suppress wages or reduce benefits within their industry. 

Although the executive order does not change the law, federal agencies are directed to start the rulemaking process, which includes a period of notice and public comment. On the other hand, supporters of noncompete agreements believe they are important for protecting investments and trade secrets. 

The states themselves mainly regulate noncompete agreements – with several states (i.e., California, North Dakota, Oklahoma, and Virginia) and the District of Columbia already banning such agreements, while others have prohibited their use with low wage employees. Noncompete agreements are mainly used by private-sector businesses. 

If you are dealing with a federal employment law issue in Atlanta, Baltimore, or Houston, contact Pines Federal today at (888) 898-9902 and get a legal team with more than five decades of combined experience on your side. 

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