Monday, July 12, 2021

Biden Executive Order Takes Aim at Noncompetes

On Friday, President Biden issues an Executive Order on Promoting Competition in the American Economy. The executive order addresses a lot of issues, including a shot at noncompetes:

To address agreements that may unduly limit workers’ ability to change jobs, the Chair of the FTC is encouraged to consider working with the rest of the Commission to exercise the FTC’s statutory rulemaking authority under the Federal Trade Commission Act to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.

What exactly does that mean? The order does not give us much to go on, and an accompanying Fact Sheet offers only: 

Make it easier to change jobs and help raise wages by banning or limiting non-compete agreements and unnecessary, cumbersome occupational licensing requirements that impede economic mobility.

Another good old "stay tuned!"

Of course, the authority of a federal agency acting without any real express statutory authorization to rewrite state contract law is likely limited. Most states - *definitely including Pennsylvania* - already have very convoluted tests to assess whether restrictive covenants are enforceable. Adding a layer of administrative agency law on top of that will only make it more difficult. In other words - expect some homework soon!

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