Biden White House Issues Sweeping Executive Order to Boost Competition and Increase Workers’ Pay

After months of being prematurely heralded as a “modern F.D.R.,” President Joe Biden recently took a significant step toward beginning to justify the lofty comparison.  On July 9, 2021, Biden issued an expansive executive order (the “Order”) focused on aggressive enforcement of antitrust law with, as Biden put it, “no tolerance for abusive actions by monopolies, no more bad mergers that lead to mass layoffs, higher prices and fewer options for workers and consumers alike.”  The Order requires 72 initiatives by more than a dozen federal agencies.  Further, it specifically targets barriers to competition that have led to higher prices for food, prescription drugs, hearing aids, internet service, airfares, consumer products, rent, financial transactions and telecommunications services. 

The Biden Administration reasons that “[c]ompetition in labor markets empowers workers to demand higher wages and greater dignity and respect in the workplace”—hardly a controversial economic analysis.  Thus, through the Order, Biden encourages the Federal Trade Commission (“FTC”) and Department of Justice (“DOJ”) to “prevent employers from collaborating to suppress wages or reduce benefits by sharing wage and benefit information with one another.”  Whether the FTC and DOJ act on this guidance remains to be seen, though the recent appointment of Lina Khan to chair the FTC is certainly a positive sign.

In addition to pushing broad antitrust enforcement, generally, the Order also specifically targets non-compete agreements, urging the FTC and DOJ to ban or at least limit their use.  Legislation banning non-compete agreements has stalled in Congress multiple times, despite some bipartisan support.  In 2016, the Obama Administration called for state legislatures to pass similar bans, but to little effect.  Regardless, the extent to which state-level legislation barring restrictive covenants actually impacts employees remains unclear.  While California has passed legislation making non-compete agreements unenforceable, this has proven to be far from a complete solution, with approximately 45% of hiring managers in the Golden State reporting that they still bind employees to unlawful restrictive covenants.  

Perhaps the passing of new rules and robust enforcement at the federal level—with a former public interest attorney and prominent Amazon critic at the helm of the FTC—will finally curb these pervasive restrictions that nearly half of American workers have faced at some point in their careers.