As he promised during the 2020 presidential campaign, President Joe Biden issued an Executive Order on Friday that directs the Federal Trade Commission (FTC) to curtail the use of unfair non-competes or other agreements that may limit employee mobility. This Executive Order is the culmination of efforts by federal legislators to ban or limit non-competes. A number of bills have been brought to the floor of the U.S. Senate, mostly by Democratic Senators, and none of been able to marshal sufficient bipartisan support to advance. As those legislative efforts fizzled, several of those senators then lobbied the FTC to ban non-competes, which in turn held hearings over whether to take regulatory action early last year.
As explained in greater detail below, the Biden Executive Order is short on detail and simply encourages the FTC to take unspecified action against unfair non-competes and other agreements limiting employee mobility. On its face, the Executive Order focuses on “unfair” agreements which have generally been understood to mean non-competes imposed on lower-wage workers. Should, however, the FTC take a more aggressive approach to ban all non-competes, that could harm one of the key drivers of employment in the U.S. — small and medium-sized businesses that more heavily rely on non-competes to protect their companies.
Continue Reading The Biden Executive Order Seeking to Curtail Non-Competes: Why It May Be Bad for Small Companies