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Biden prepares to limit non-compete clauses and employer wage collusion with new executive order

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President Biden is preparing to sign a sweeping executive order that will ban or severely limit non-compete agreements used by employers to keep their employees from jumping ship and to prevent wage suppression and benefits reduction.

On Wednesday, the Biden administration released new details on the executive order. It appears that details are being leaked a piece at a time. The order would empower the Federal Trade Commission (FTC) to ban or limit non-compete agreements.

“First, roughly half of private sector businesses require at least some employees to enter non-compete agreements, affecting over 30 million people. This affects construction workers, hotel workers, many blue-collar jobs, not just high-level executives. [The president] believes that if someone offers you a better job, you should be able to take it. It makes sense,” White House Press Secretary Jen Psaki said to reporters Wednesday aboard Air Force One. “So, in keeping with his campaign promise, the executive order will call on the FTC to adopt rules that curtail non-compete agreements.”

Psaki also remarked that Biden is keeping a “campaign promise to promote competition in labor markets.”

The order also asks the FTC to ban unnecessary occupational licensing restrictions which Biden contends may potentially impede workers’ ability to move and make more in wages. Psaki stated that nearly 30 percent of jobs out there require a license.

“While occupational licensing can serve important health and safety concerns, unnecessary or overly burdensome licensing can lock people out of jobs. This hugely affects military families in particular, over one-third of whom work in a field requiring a license and who are subject to military-directed moves every year,” she stated.

Biden is moving to prevent employers from sharing worker wage information as well with one another. He wants the FTC and the Department of Justice to strengthen antitrust guidance to prevent employers from colluding to suppress wages or reduce benefits.

Currently, employers are permitted to exchange wage data with one another.

“The president believes that, in a healthy, competitive economy, employers must compete for workers and competition among employers gives workers more opportunity,” a person familiar with the order said who was quoted by The Hill.

The Director of the National Economic Council Brian Deese tweeted on Wednesday that Biden’s intention is to ensure that employers do not share with one another wage data that is not also available to employees.

Deese contends that when markets are healthy “employers compete for labor, giving workers more opportunity to earn better wages and benefits.” He also stated that obstacles “to this kind of competition have grown across time” and that the president “will act to go at those barriers directly.”

Deese indicated that more details would be released this week on the order.

Psaki announced a day earlier that the executive order would include a number of provisions affecting the agriculture sector according to Roll Call. Those would potentially include an effort to craft new protections for the right to repair equipment. The Agriculture Department will also be mandated to tighten standards for labeling food products as “Product of the USA.”

Not everyone was thrilled with the looming executive order and some wonder how it will play out:

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