On July 9, 2021, President Biden issued an “Executive Order on Promoting Competition in the American Economy.” Notably, the order encourages the FTC to promulgate rules to “curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” Earlier that day, the White House issued a Fact Sheet explaining that the order is intended to promote economic competition, and “[e]ncourages the FTC to ban or limit non-compete agreements.” The White House identified the ubiquity of non-compete clauses in private employment contracts—particularly in the construction and retail industries—as a costly impediment to competition. Analysts have focused on two ambiguities in the documents: (1) the Executive Order’s focus on “unfair” non-compete agreements; and (2) the extent to which the FTC will “curtail,” “limit,” or “ban” the practice. These ambiguities, and the inevitable challenge to any forthcoming FTC rules confuse the future enforceability of non-compete clauses in employment contracts.
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