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President Biden’s Executive Order of July 9, 2021 and its Impact on Non-Compete Agreements

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On July 9, 2021, President Biden issued Executive Order 14036, titled “Promoting Competition in the American Economy”. The order is wide-ranging and addresses issues related to competition across industries and practices. For instance, the EO directs the Federal Trade Commission to look into banning “pay for delay” pharmaceutical agreements; it directs the Federal Communications Commission to issue rules promoting competition among internet providers; it directs the Department of Justice to vigorously enforce United States antitrust laws.

One headline-grabbing element is that the EO encourages the Federal Trade Commission to ban or limit non-compete agreements in the labor market. According to the Fact Sheet issued alongside the EO, roughly half of private sector business require some employees to enter into non-compete agreements in order to be hired for a job. In recent years, non-compete agreements have come under increasing scrutiny as their use expanded to even low-wage workers.

The Executive Order does nothing to impact the current non-compete landscape, however, we expect the Federal Trade Commission to issue rules restricting non-competition agreements pursuant to their rule-making authority in the Federal Trade Commission Act. 15 U.S.C. Sec. 57a. The rule-making process is as follows: 1) the Commission will publish a proposed rule in the federal register; 2) the public will have a period of time to comment on the proposed rule, typically 180 days; 3) the Commission will address the public comments and may potentially alter the proposed rule; 4) finally, the Commission will publish the Final Rule in the Federal Register.

Cantrell Zwetsch is monitoring the rule-making process and will provide updates as the process plays out.

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Cantrell Zwetsch is a litigation boutique that focuses its practice on non-compete and unfair competition disputes, employment law, and business disputes throughout Florida and Georgia, including the cities of St. Petersburg, Tampa, Clearwater, Orlando, Sarasota, Fort Myers, West Palm Beach, Miami, Fort Lauderdale, Jacksonville, Key West, Pensacola, Tallahassee, Gainesville, Savannah, Macon, Augusta, and Atlanta.

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