The Biden Administration has turned its sights on limiting the enforcement of non-competes: how will your business be affected?
On July 9, 2021, President Biden issued an executive order to address, among other things, the preservation of a fair, open, and competitive marketplace in the American economy. Specifically, the order notes that:
“[B]road and sustained prosperity depends on an open and competitive economy, which creates more high-quality jobs and the economic freedom to switch jobs or negotiate a higher wage. Industries have consolidated, competition has weakened in too many markets, denying Americans the benefits of an open economy and widening racial, income, and wealth inequality.”
The order highlights that it is growing more difficult for workers to bargain for higher wages and better work conditions, and that non-compete agreements restrict workers’ ability to change jobs.
The White House Competition Council
In an effort to address the Administration’s concerns about industry consolidation and the limitation of worker mobility, the order creates a White House Competition Council, which coordinates the Federal Government’s efforts to address unfair competition affecting the American economy.
Among other things, the Council is instructed to work with the Federal Trade Commission to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility. The order places particular emphasis on the following practices:
- data collection and surveillance practices that may damage competition, consumer autonomy, and consumer privacy,
- anticompetitive restrictions on repair services, such as the restrictions imposed by powerful manufacturers that prevent farmers from repairing their own equipment,
- anticompetitive conduct or agreements in prescription drug industries that delay the market entry of generic drugs,
- competition in major Internet marketplaces,
- occupational licensing restrictions,
- tying and exclusionary practices in the brokerage or listing of real estate, and
- other unfair industry-specific practices that substantially inhibit competition.
The order instructs the Office of Economic Policy to submit a report to the Council of the effects of lack of competition on labor markets within 180 days of the order. BoyarMiller will be paying particular attention to the Council’s report and how, if at all, the FTC will attempt to limit the use of non-competes. Stay tuned for an update once the report is issued.