Neil Irwin of the New York Times reported on Thursday morning that President Biden is preparing an Executive Order focused on competition policy. He reports that people familiar with the Order say one section has several provisions aimed at increasing competition in the labor market. It is difficult to know what is coming, but one possibility is that the Executive Branch could seek, by way of a pen, to mandate changes to what has traditionally been a state law province of contract law and in some cases restrictions on an employer’s ability to protect itself against abuses by employees who go to work for the competition. There has always been a great degree of tension between employers’ property rights and the freedom of employees to work for whomever they want to work for. And there are potential abuses on both sides of the equation. Some employers seek to unfairly limit an employee’s ability to work for a competitor, even when that employee is engaged in tasks that do not involve trade secrets or sensitive customer information. On the other hand, there are many instances of employees who have been entrusted with highly valuable and sensitive trade secret information being lured away by competitors for large sums of money in hopes that those employees will bring with them technology, information, and contacts that the former employer devoted a small fortune to develop and utilize. Different states around the country have taken different approaches to these issues, but now it appears that the Biden Administration, through the Federal Trade Commission, may seek to impose a national standard limiting non-compete agreements and may seek by regulation, rather than legislation, to ban “unnecessary” occupational licensing restrictions. Such an order at least has the potential of disrupting contractual relationships on which employers and commerce, in general, have relied to foster innovation and growth. We will soon see how involved President Biden’s pen could become in this arena.
Here is the link to Snell & Wilmer’s publication site, including the Legal Alert link, where we anticipate providing commentary after this Order is issued.