Non-Compete Agreement Executive Order

On July 9th, 2021, President Biden signed an Executive Order aimed at promoting competition in the American economy. One of the highlights of the order was a call to end the widespread use of non-compete agreements in various industries. This move aims to increase worker mobility, boost wages, and stimulate innovation.

Non-compete agreements are contracts that prohibit employees from working for a competitor after leaving their current employer, usually for a certain period. In theory, these agreements protect businesses from losing their intellectual property and trade secrets to competitors. In practice, however, they have been criticized for limiting employees` career opportunities, stifling innovation, and driving down wages.

The Executive Order aims to promote competition by encouraging the Federal Trade Commission (FTC) to limit or even ban the use of non-compete agreements. It also calls on the FTC to use its rulemaking authority to curtail the unfair use of occupational licensing restrictions, which can often limit competition and raise prices.

The Order also directs the FTC to address other practices that hinder competition, such as the use of “no-poach” agreements between companies, which prevent them from hiring each other`s employees. These agreements reduce workers` bargaining power, and according to the White House, they have led to lower wages and fewer job opportunities for workers.

Under the Biden administration, non-compete agreements are expected to be more limited, with exceptions for certain industries such as those involving trade secrets or national security. The Order is a significant step towards leveling the playing field for workers and promoting a fair and competitive economy.

Employers who use non-compete agreements are advised to review their policies and ensure they do not run afoul of the new measures. Additionally, employers may need to revise their approach to non-compete agreements in light of this new Executive Order.

In conclusion, the Executive Order on non-compete agreements is a significant move towards promoting competition and fairness in the American economy. It provides an opportunity for workers to have greater bargaining power, more job opportunities, and higher wages. While the Order is a step forward, it remains to be seen how it will be implemented, and how much impact it will have on the labor market. Nonetheless, it is a positive development for workers who have long been burdened by non-compete agreements, as it provides hope for a fairer and more competitive economy.