On July 9, 2021, President Biden signed an Executive Order outlining 72 initiatives addressing competition in the workplace and targeting non-compete clauses and agreements. According to a White House statement, the President signed the Order “to promote competition in the American economy, which will lower prices for families, increase wages for workers, and promote innovation and even faster economic growth.”
Specifically, the President’s Order calls on the Federal Trade Commission (“FTC”) to ban or limit non-compete agreements. Further, the Order Encourages the FTC to ban unnecessary occupational licensing restrictions that impede economic mobility, which would limit the number of jobs in the U.S. that require a license. According to the White House statement, these initiatives will make it easier to change jobs and help raise wages.
Among other initiatives, the Order also aims to lower prescription drug prices by supporting state and tribal programs that will import safe and cheaper drugs from Canada and save Americans with hearing loss thousands of dollars by allowing hearing aids to be sold over the counter at drug stores.
It is important to note that the Order does not itself put these initiatives into effect, but instead encourages federal agencies to begin a rulemaking process, which generally leads to a comment period (this can take three or four months). Nevertheless, given the push for limiting the use of non-compete agreements in recent years, businesses will need to prepare for future restrictions. Employers should revisit their policies and ensure any non-compete provision is narrowly tailored to withstand any judicial challenge.
We will continue to monitor for new developments and provide updates and analysis, as new information becomes available. Should you have any questions regarding how the Executive Order might affect your business, please contact ALG.