Biden to issue executive order to curtail noncompete clauses

President Biden plans to sign an executive order to crack down on noncompete agreements used by employers to prevent their employees from moving to rival firms, the White House announced Wednesday.

The president’s order would encourage the Federal Trade Commission (FTC) to ban or limit noncompete agreements.

“Roughly half of private sector businesses require at least some employees to enter noncompete agreements, affecting over 30 million people. This affects construction workers, hotel workers, many blue-collar jobs, not just high-level executives. He believes that if someone offers you a better job, you should be able to take it. It makes sense,” White House press secretary Jen Psaki said during a press briefing.

In an effort to limit the number of jobs in the U.S. that require a license, Biden’s forthcoming order would also encourage the FTC to ban unnecessary occupational licensing restrictions, which could impede workers’ ability to move and gain more in wages.

Psaki said that almost 30 percent of jobs in the U.S. require a license.
 
“While occupational licensing can serve important health and safety concerns, unnecessary or overly burdensome licensing can lock people out of jobs. This hugely affects military families in particular, over one-third of whom work in a field requiring a license and who are subject to military-directed moves every year,” she said.

Biden is also working to crack down on employers sharing data on workers with one another.

His order would encourage the FTC, along with the Department of Justice, to strengthen antitrust guidance in an effort to prevent employers from working together to suppress wages or reduce benefits by sharing information with one another. 

Current guidance allows for employers to exchange wage data with one another, outside of conversations with workers, which is not subject to antitrust guidance.

“The president believes that, in a healthy, competitive economy, employers must compete for workers and competition among employers gives workers more opportunity,” a source familiar with the matter said.