This week President Biden issued an executive order instructing the Federal Trade Commission to take measures to limit moves made by employers that allegedly have the effect of depressing wages. These include use of broad non-competition agreements with employees, mergers that limit the number of available employers, and unnecessary state licensing requirements.

In terms of non-competes, the order encourages the FTC to review situations where the agreements limit employee movement to competitors for higher wages. In recent years, critics on the left and right have complained that use of non-competes with entry-level or unskilled workers limits their freedom to negotiate higher wages. While the executive order will not affect state non-compete laws, it could motivate the FTC to intervene in situations where use of the agreements involves allegedly anti-competitive practices.

Several states have recently restricted use of non-competes, and Congress is in the early stages of considering federal legislation that would set nationwide limits on the use of these agreements. Employers that rely on non-competes to protect competitive interests and confidential business information should review these developments to determine whether they affect agreements already in use.

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