Biden readies order to rein in worker non-compete clauses and make switching jobs easier

WASHINGTON — President Joe Biden will issue a forthcoming executive order that calls on the Federal Trade Commission to adopt rules to curtail worker non-compete agreements, part of a broader set of executive actions aimed at increasing competition in the marketplace.

The order is expected to be signed and released in the coming days, and it will fulfill Biden’s “campaign promise to promote competition in labor markets,” White House press secretary Jen Psaki said Wednesday.

In a related action, Biden will call on the FTC to ban “unnecessary” occupational licensing requirements, Psaki said.

“While occupational licensing can serve important health and safety concerns, unnecessary or overly burdensome licensing can lock people out of jobs,” she added.

Biden will also encourage the FTC and the Department of Justice to work together to limit employers’ rights to share worker pay information in ways that could negatively impact workers looking for better paying jobs.

The text of the orders has not been released, but their long-term effectiveness will depend upon whether the regulators who write the rules make them capable of surviving legal challenges and of actually forcing change in the marketplace.

Occupational licensing requirements, for example, are typically determined by individual states, and not by the federal government, so it’s unclear how much impact new federal rules would have on state regulations.

Taken together, these orders are part of a broader push within the Biden administration to encourage more competition in the U.S. economy by limiting how the biggest corporations and employers can exert their power over both their competitors and their employees.

The concept of using executive branch actions to strengthen workers’ hands and rein in industry giants has its roots in the final years of the Obama administration.

In the spring of 2016, then-President Barack Obama issued an executive order designed to “increase competition” by calling on federal agencies to address anti-competitive behavior in their respective purviews.

Then-Vice President Biden also threw himself behind the push to end non-compete agreements.

“Folks, no one should have to sit on the sidelines because of an unnecessary non-compete agreement,” Biden said in a statement in October of 2016.

“We have the most dynamic, productive workers in the world, but they can’t reach their true potential without freedom to negotiate for a higher wage with a new company, or to find another job after they’ve been laid off.”

Former President Donald Trump’s election in 2016 effectively hit the pause button on plans to expand regulations across the entire U.S. economy. Instead, it ushered in four years of laissez-faire fiscal and regulatory policy.

Biden ran for president against Trump partly on a pledge to eliminate non-compete clauses. In 2020, his campaign said the agreements, “hinder the ability of employees to seek higher wages, better benefits, and working conditions by changing employers.”

Biden’s election in November of last year flipped the policy switch again, and brought the broader conversation about how to empower smaller companies and individual workers back to the center of the federal policy making debate.