President Biden is expected to sign an executive order that would call on the Federal Trade Commission to curtail the use of non-compete agreements, which restrict where employees can work after leaving a job.
Jen Psaki explained that President Biden believes non-compete agreements are bad for workers, saying, “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.”
Non-compete clauses force workers to sign away their rights to take a better job in similar fields, while businesses suggest they are necessary to protect trade secrets and investments.
The White House says non-competes drive down wages and increase income inequality.
California, North Dakota and Oklahoma already ban non-compete agreements, and close to a dozen states prohibit their use with low wage workers. Even with a ban, companies in these states continue to include them in employment contracts.
Biden has a newly confirmed FTC Chairperson, Lina Khan, who has argued in favor of rules for anti-competitive practices, among them non-compete clauses, saying that they “deter workers from switching employers, weakening workers’ credible threat of exit, and diminishing their bargaining power.”
Businesses are likely to challenge any new rulings.