Biden to target noncompete clauses, wage collusion

Details of competition policy executive order are being unveiled piecemeal

President Joe Biden’s executive order aims to curb collaboration on wage rates between competing employers.  (Caroline Brehman/CQ Roll Call)
President Joe Biden’s executive order aims to curb collaboration on wage rates between competing employers. (Caroline Brehman/CQ Roll Call)
Posted July 7, 2021 at 6:24pm

President Joe Biden wants to make it more difficult for employers to collude to suppress wages — the latest piece of a sweeping executive order on competition policy that is being unveiled in pieces by the White House during a generally quiet Fourth of July holiday week.

The executive order will include language pushing the Justice Department and the Federal Trade Commission to try to curb collaboration on wage rates between competing employers, according to a person familiar with the order. Such practices can be used to suppress wages.

Brian Deese, the director of the National Economic Council, said in a series of tweets Wednesday that the intention is to make sure that employers do not share with one another wage data that is not also available to employees.

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

The order will include a focus on limiting noncompete clauses in employment contracts, as well as limiting burdensome occupational licensing regulations.

“First, roughly half of private sector businesses require at least some employees to enter noncompete 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 told 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 noncompete agreements.”

“His executive order will also call on the [FTC] to adopt rules that ban unnecessary occupational licensing requirements,” Psaki said. “While occupational licensing can serve important public health and safety concerns, unnecessary or overly burdensome licensing can lock people out of jobs. This hugely affects military families in particular.”

Military families often move around the country in response to deployments, and that can mean moving to jurisdictions with different licensing requirements, many of which may not reciprocate.

Deese pointed out that differing licensing standards can complicate employment for many military spouses who work as teachers.

He said more details would be released this week on the order, which the administration appears to be unveiling in smaller chunks before Biden signs the final product. The New York Times was the first to report on Wednesday’s piece of the pie.

Wednesday’s updates from Psaki and Deese follow an announcement by the press secretary a day earlier that the order would include several provisions affecting the agriculture sector, including an effort to craft new protections for the right to repair equipment. It will also direct the Agriculture Department to tighten standards for labeling food products as “Product of the USA.”