Noncompetes face uncertain future under Biden administration

The Biden administration has initiated numerous legal changes against employers, and most of you no doubt have been closely following the major disputes surrounding the federal COVID-19 vaccine mandates. Nevertheless, you shouldn’t sleep on seemingly more mundane matters that don’t attract the big headlines. One thing is certain for 2022: The coronavirus is here to stay. The fate of workplace noncompete agreements, however, is much less certain under the current administration.

Agreements ‘unfairly limit worker mobility’

Noncompete agreements serve a valuable purpose for employers. They provide peace of mind that an employee won’t take business or protected trade secrets to a competitor immediately after departure. Although the clauses have traditionally been used for professional employees and officers, they are now customary in most employment contracts.

In July, President Joe Biden issued an Executive Order (EO) encouraging the Federal Trade Commission (FTC) “to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” Among other measures, the order empowered the FTC to use its rulemaking authority to prohibit or ban the agreements between employers and employees to promote a competitive economy.