Biden Takes a Hard Stance on Non-Compete Agreements
Biden Takes a Hard Stance on Non-Compete Agreements
September 28, 2021

The American promise of a broad and sustained prosperity depends on an open and competitive economy.”President Joe Biden, Executive Order 14036.

 

On July 9, 2021, President Joe Biden signed Executive Order 14036 to promote competition by discouraging non-compete agreements and “any other unfair industry-specific practices that substantially inhibit competition.” The Order stresses the importance of a “competitive economy,” reasoning competition creates more high-quality jobs due to economic freedom to switch jobs or negotiate higher wages

The Order aims to protect fair competition by policing unfair and abusive business practices, passing regulations that resist consolidation and promote competition, and compelling disclosure of information for market transparency. In doing so, President Biden specifically targets industries such as labor, telecommunications, healthcare, and technology.

Business owners across the United States should expect to see regulations passed in the coming months to restrict the use of non-compete agreements and some occupational licensing restrictions. According to the Fact Sheet accompanying the Order, anywhere from 36-60 million workers in the private-sector are bound by non-compete agreements, these regulations can have an impact on your employee-related business activities.

While regulation of business-related practices was previously left to the states, President Biden has made clear his intent for federal agencies to curtail the “unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker ability.”

Specifically, President Biden encourages the Federal Trade Commission (“FTC”) to address lack of competition and burdensome occupational licensing requirements in labor markets by passing regulations that:

  • Ban or limit non-compete agreements;
  • Ban unnecessary occupational licensing restrictions that impede economic mobility; and
  • Prevent employers from collaborating to suppress wages or reduce benefits.

As of today, no federal agencies have issued new regulations regarding non-compete agreements; however, all employers that utilize non-compete agreements need to be on the lookout for updates to applicable state laws, as it is possible regulations will be passed to at least restrict the use of non-compete agreements.

Follow Hunter Business Law as we monitor any new rules or regulations passed by the FTC or DOJ.

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This Blog was written by Hunter Business Law Legal Assistant Kayla Crider

DISCLAIMER: This blog is for educational purposes only and does not offer nor substitute legal advice. Additionally, this blog does not establish an attorney-client relationship and is not for advertising or solicitation purposes. Any of the content contained herein shall not be used to make any decision without first consulting an attorney. The hiring of an attorney is an important decision not to be based on advertisements or blogs. Hunter Business Law expressly disclaims any and all liability in regard to any actions, or lack thereof, based on any contents of this blog.

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