September 27, 2021

Volume XI, Number 270

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September 27, 2021

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Biden Executive Order Calls for Ban on Noncompete Agreements

On Friday, July 9, 2021, President Joe Biden signed an executive order directing various federal agencies to implement 72 specific actions intended broadly to increase competition in the American economy. The executive order is intended to impact a wide range of economic activity, including mergers and acquisitions, occupational licensing, anticompetitive behavior, and prices of medical devices and prescription drugs.

One of the specific activities the order seeks to modify is the use of noncompete agreements to limit the ability of employees to work for competitors after leaving their employer. In a public statement on July 9, 2021, President Biden decried the “ridiculous” prevalence of noncompete agreements in the United States, alleging that one in three American businesses required employees to sign noncompete agreements and that one in five American workers without a college degree were subjected to noncompete agreements. President Joseph R. Biden, Remarks at Signing of an Executive Order Promoting Competition in the American Economy (July 9, 2021) President Biden argued these agreements, in many cases, were implemented not to protect any legitimate interest of the employer but to “keep wages low.” President Biden’s executive order accordingly directs the FTC to “ban or limit noncompete agreements.” At this time, the text of the executive order has not been released, and it remains to be seen exactly how the FTC will respond to the president’s directive.

Although no rules have yet changed regarding the enforceability of noncompete agreements in the United States, employers should anticipate that attempts to impose noncompete agreements on employees moving forward may be opposed by the FTC as an unfair labor practice. Employers should use particular caution when attempting to impose noncompete agreements upon low-wage workers or workers without advanced education, as those were two groups of workers particularly cited as examples of overreach in the current noncompete landscape. The FTC has the authority to seek injunctive relief and financial penalties from companies that take anticompetitive action, and employers should anticipate the current iteration of the FTC will be more willing to use those powers in egregious circumstances, given the public stance of the Biden administration.

© 2021 Dinsmore & Shohl LLP. All rights reserved.National Law Review, Volume XI, Number 193
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About this Author

Brian Moore, labor and employment litigator, Dinsmore Shohl law firm,
Of Counsel

Brian represents companies in labor, employment, and general litigation matters. His business-oriented approach enables him to guide clients through a myriad of challenges. Brian draws on his experience to help clients reach efficient resolutions -- or pursue litigation and trial -- as the situation warrants. Working with clients in the banking, insurance, retail, health care, energy, hospitality, and food and beverage industries, he has guided them through an array of issues, including discrimination, harassment, wage and hour, deliberate intent, unfair labor practice,...

304-357-9905
Jason Hillard, Labor, Employment Litigator, Dinsmore Shohl Law firm
Associate

Jason Hilliard is a member of the Labor and Employment Department. Jason’s practice focuses on representing employers in all aspects related to the workplace. He has experience litigating and advising clients in matters arising under Title VII, the Americans with Disabilities Act, the Family Medical Leave Act, the Fair Labor Standards Act, the Equal Pay Act, and other state and federal employment statutes and regulations. 

Jason also regularly litigates non-compete and non-solicitation matters as well as cases involving alleged unpaid overtime...

513-977-8569
S. Joseph Stephens, III Associate Labor Employment Cincinnati
Associate

Joe’s practice primarily focuses on assisting client employers of all sizes with a wide range of labor and employment issues.  He has counseled employers on matters involving the Fair Labor Standards Act, Title VII of the Civil Rights Acts, the Americans with Disabilities Act, the Family and Medical Leave Act, the National Labor Relations Act, and employment contract law.

Joe has substantial experience defending employers against charges filed with the Equal Employment Opportunity Commission and similar state employment commissions, as well as matters in state and federal courts...

513-832-5452
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