President Biden Signs Executive Order to Curtail Non-Compete Agreements

Update 7/12/21:

On July 9, 2021, President Biden signed the “Executive Order on Promoting Competition in the American Economy,” in which he will ask the Federal Trade Commission (FTC) to ban or limit non compete agreements, which restrict where you can work after leaving a job. The order includes 72 initiatives by more than a dozen federal agencies to promptly tackle some of the most pressing competition problems in the US economy. In addition to the ban or limitation of non compete agreements, President Biden also encouraged the FTC to ban unnecessary occupational licensing restrictions. Additionally, President Biden encouraged the FTC and DOJ to strengthen antitrust guidance to prevent employers from collaborating to suppress wages or reduce benefits by sharing wage and benefit information with another.

While non compete agreements have historically been associated with workers with higher-end positions, a report from the U.S. Treasury found that 15% of workers with 4 year college degrees were subject to non competes, as well as 14% of workers who make less than $40,000 annually.

For further information, the White House has released a Fact Sheet on the executive order. Please contact us, or open a ticket in our Ask an Attorney Portal if you are a client of ours.

(Written 7/8/2021). On Thursday July 7th, it was announced that President Biden plans to sign an executive order, which will direct the Federal Trade Commission (FTC) to adopt rules that will curtail the use of non-compete agreements, which affects over 30 million workers, according to Press Secretary Jen Psaki.  In addition to the ban on non-competes, President Biden will also encourage the FTC to ban unnecessary occupational licensing restrictions.

The move away from requiring non-compete agreements has been gaining steam nationwide, as many states have already outright banned them in certain circumstances, including: California, North Dakota, Illinois, and Maryland.  Additionally, two U.S. Senators introduced a bill in 2019 that would have limited non-compete agreements nationwide.

At myHRcounsel, we have years of experience working with clients, where we advise our clients to not use non-compete agreements for their employees.  In addition, we also hosted a webinar in July 2020, where we discussed the who, what, where, when, why and how of restrictive covenants, which you can watch here.

As the text of the executive order has not been released, we will provide an update once President Biden has signed the executive order with the full details.

This blog article is intended for general information purposes only and should not be construed as legal advice or opinion.  Contact myHRcounsel with questions about the use and enforcement of non-compete agreements.