The Biden administration wants to rein in use of abusive non-compete agreements by businesses, CNBC.com reported.
A non-compete is a legal contract between an employer and an employee. Typically, businesses use them to restrict workers from accepting a job with a competitor for a certain time period after employment. Businesses generally use them as a safeguard, to protect trade secrets and proprietary information.
President Joe Biden called on the Federal Trade Commission (FTC) to write a rule to “curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”
The directive was part of a broad executive order issued this month to promote competition in the U.S. economy.
Roughly 16 percent to 18 percent of American workers are subject to a non-compete clause, according to Rebecca Kelly Slaughter, a commissioner at the FTC.
To that point, 30 percent to 40 percent are asked to sign a non-compete after accepting employment, often on the first day of work, said Slaughter, a Democrat, in a speech last year. That’s a concern for workers who lack bargaining power and have no choice but to sign, she added.
To read Greg Iacurci’s full report on CNBC.com, click here.