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Biden to issue executive order to curtail non-compete clauses : White House

By Arghyadeep on Jul 08, 2021 | 05:38 AM IST

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President Joe Biden will issue an executive order to restrain non-compete agreements, part of a broader set of executive actions to increase competition in the marketplace.

Non-compete agreements prevent employees from pursuing a similar profession or trade with the competing company after the cessation of employment.

The agreements have been viewed favorably in industries where employees receive extensive training. However, many criticize the use of the agreement for the less skilled industries.

“In keeping with his (Biden’s) campaign promise, the executive order will call on the FTC to adopt rules that curtail non-compete agreements,” White House press secretary Jen Psaki said on Wednesday. 

Psaki said that nearly half of private-sector businesses require at least some employees to enter non-compete agreements, affecting over 30 million people in various many blue-collar jobs, not just high-level executives.

“He (Biden) believes that if someone offers you a better job, you should be able to take it.”

Psaki said the executive order would also call on the FTC to adopt rules that ban “unnecessary” occupational licensing requirements as about 30% of jobs in the U.S. require a license from attorneys and accountants to interior designers and hairdressers.

“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 direct the FTC and the Department of Justice (DoJ) to limit employers’ rights to share worker pay information that could negatively impact the employees looking for better-paying jobs.

The FTC has investigated the practice’s effect on workers and has sought to regulate which industries may require occupational licensing and which use licensing to prevent competition.

These orders will encourage more competition in the U.S. economy by limiting the exerting power of the big corporations and employers over their employees and competitors.

Picture Credit: iPleaders

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