On July 9, 2021, Fox News reported on a new executive order signed by President Joe Biden that seeks to limit the use of non-compete agreements for certain workers. While the order is aimed at promoting competition in the labor market, it has sparked debate on the impact it will have on businesses and workers alike.
What Are Non-Compete Agreements?
Non-compete agreements are contracts between employers and employees that restrict the employee`s ability to work for a competitor or start a competing business for a specified period of time after leaving their current job. The agreements are common in industries such as technology, finance, and healthcare, where companies want to protect their trade secrets and valuable client relationships.
However, critics argue that non-compete agreements can stifle competition and limit opportunities for workers to advance their careers. For example, a worker may be bound by a non-compete agreement that prevents them from taking a similar job with a competitor, even if they have unique and valuable skills that would benefit the new employer.
Executive Order by President Biden
The executive order signed by President Biden seeks to restrict the use of non-compete agreements for certain workers, including those who earn less than $15 per hour, work in the hospitality or restaurant industries, or have limited ability to negotiate their contracts. The order also directs the Federal Trade Commission (FTC) to consider using its rulemaking authority to restrict or ban non-compete agreements in other industries.
The administration argues that the use of non-compete agreements has resulted in lower wages and reduced job mobility for workers, particularly those in low-wage jobs. By limiting the use of non-compete agreements, the administration hopes to promote competition and increase opportunities for workers to switch jobs and negotiate better wages and benefits.
Impact on Businesses and Workers
The executive order has sparked debate among businesses and workers over the impact it will have on the labor market. Some business groups argue that non-compete agreements are necessary to protect trade secrets and maintain a competitive advantage. They also argue that restricting the use of non-compete agreements could lead to increased litigation and market instability.
On the other hand, worker advocacy groups and labor unions applaud the executive order as a step towards promoting worker mobility and increasing job opportunities. Some argue that non-compete agreements can be used as a tool by employers to keep wages low and limit opportunities for workers to negotiate better pay and benefits.
Conclusion
The executive order signed by President Biden seeks to limit the use of non-compete agreements for certain workers, with the goal of promoting competition and increasing job opportunities for workers. Whether this will ultimately benefit workers or lead to increased market instability remains to be seen, but it is clear that the use of non-compete agreements will continue to be a contentious issue in the labor market. As always, it is important for businesses and workers alike to stay informed and engaged on the latest developments in labor law and policy.
