On July 9, 2021, President Biden signed an executive order supporting limitations on the use of non-compete clauses. Styled as "promoting competition," the order encourages the Federal Trade Commission to act to limit employee non-compete clauses as well as any "other clauses or agreements that may unfairly limit worker mobility."

The Federal Trade Commission and the U.S. Department of Labor (DOL) signed anew agreement

that will bolster the FTC's efforts to protect workers by promoting competitive U.S. labor markets and putting an end to unfair, deceptive, and other unlawful acts and practices, as well as unfair methods of competition, that harm workers. The new memorandum of understanding (MOU) between the two agencies outlines ways in which the FTC and DOL will work together on key issues such as labor market concentration, one-sided contract terms, and labor developments in the "gig economy."

The MOU builds on the FTC's recent efforts to increase collaboration on issues facing workers, including the FTC's recent MOU with the National Labor Relations BoardLinks to an external site. as well as the FTC's enforcement policy statement related to gig workLinks to an external site..

"This agreement with the Department of Labor is part of our whole-of-government effort to protect workers from unlawful business practices," said FTC Chair Lina M. Khan. "Deepening our partnership with DOL will ensure that we can work collectively to tackle illegal conduct that suppresses wages, reduces access to good benefits and working conditions, and stifles economic liberty for workers across the economy."

"Protecting workers on the job and promoting fair markets requires a level playing field," saidSolicitor of Labor Seema Nanda."What's unfair for workers is also unfair for law-abiding employers, and this partnership will help both of our agenciescombat unlawful behavior, such as misclassification andcontract provisions that restrict accessible opportunities to our growing workforce.The Department of Labor is committed to ensuring equity and improving job quality for all workers, and we will not hesitate to enforce the laws that protect workers' rights. We look forward to working with the Federal Trade Commission to hold employers accountable and empower workers."

The new agreement enables the FTC and DOL to closely collaborate by sharing information, conducting cross-training for staff at each agency, and partnering on investigative efforts within each agency's authority. This MOU is in line with the President's Executive Order on Competition, which affirms the importance of enforcing antitrust laws to combat abuses of market power, including in labor markets.

The MOU identifies areas of mutual interest for the two agencies:collusive behavior; the use of business models designed to evade legal accountability, such as the misclassification of employees; illegal claims and disclosures about earnings and costs associated with work; the imposition of one-sided and restrictive contract provisions, such as non-compete and training repayment agreement provisions; the extent and impact of labor market concentration; and the impact of algorithmic decision-making on workers.

The agreement is part of a broader FTC initiative to use the agency's full authority, including enforcement actions and Commission rulemaking, to protect workers. The FTC has made it a priority to scrutinize mergers that may harm competition in U.S. labor markets. Research shows that these markets are already highly concentrated, and less competitive labor markets can enable firms to harm workers by lowering wages, reducing benefits, and perpetuating precarious or exploitative working conditions.

The FTC has also prioritized cracking down on anticompetitive contract terms that put workers at a disadvantage. The Commission is considering a proposed rule that would ban noncompete clauses in employment contractsLinks to an external site., and has taken action to protect workers in several Commission orders. These include actions against Anchor GlassLinks to an external site., Ardagh Group, Prudential Security, I-O GlassLinks to an external site., 7-ElevenLinks to an external site., andDaVitaLinks to an external site..

In addition, the agency will continue to take action to stop deceptive and unfair acts and practices aimed at workers, particularly those in the "gig economy" who often don't enjoy the full protections of traditional employment relationships. The FTC's actions in this area include: cases against AmazonLinks to an external site., UberLinks to an external site., HomeAdvisorLinks to an external site., and BurgerimLinks to an external site.; an ongoing rulemakingLinks to an external site. to challenge bogus money-making claims; and a notice of penalty offensesLinks to an external site.sent to more than 1,100 businesses that pitch money-making ventures.

• Do you think companies should be allowed to negotiate non-competition agreements? Why or why not?
• Should the federal government dictate this area, or should it be up to individual states to legislate non-competition agreements under state law?