Even as non-compete clauses have been banned by several states, in many others they remain standard practice. That means many in radio, from on-air personalities to sales managers, need to navigate non-competes when leaving one employer for another. But in a move he says is geared to help workers, President Biden on Friday issued an executive order that encourages the Federal Trade Commission to adopt new rules that either ban or sharply restrict the use of non-compete agreements.
According to the White House, roughly half of private-sector businesses require at least some employees to enter non-compete agreements, affecting some 36 to 60 million workers. It says by curtailing non-competes, it will make it easier for people to change jobs and help to raise wages.
“An incredible amount of non-compete clauses for ordinary people were done for one reason – to keep wages low,” said Biden during a ceremonial signing of the executive order Friday. “My executive order calls on the FTC to ban or limit non-compete agreements. Let workers choose who they want to work for.”
Biden said that government data shows at least one in three businesses require their workers to sign a non-compete agreement. It’s so prevalent, he said, that it is not just high-paid executives or managers that sign non-competes. A recent study found one in five workers without a college education are subject to a non-compete agreement.
“Workers should be free to take a better job if someone offers it. If your employer wants to keep you, he or she should have to make it worth your while to stay. That’s the kind of competition that will lead to better wages and greater dignity of work,” said Biden.
A study released by the U.S. Department of Treasury in 2016 concluded such agreements reduce wages by an average of 1.4%. “As workers age, the effect of tightened non-compete enforcement appears to rise,” the report said. “Given that job switching is generally associated with substantial wage increases, this increased difficulty of switching would reduce wage growth over time.”
Utah is one state that has barred non-competes. It adopted a law in 2018 that said anyone who makes less than $913 per week or $47,476 a year could not be held to one. Non-competes are still allowed, however, if they are part of an employment contract that lasts four years or less. The bill had the backing of Utah’s AFL-CIO, but it was opposed by several of the biggest media owners in Utah, including Bonneville parent Deseret Management Corp.
Other states have also put limits on non-competes, including Oregon and Hawaii as the issue has found growing bipartisan support in statehouses as well as in Washington.
Reviving Net Neutrality Rules
Beyond targeting non-competes, President Biden’s executive order also encourages the Federal Communications Commission to take steps to reverse the net neutrality rules adopted during the previous administration. The order aims to return to the regulations adopted during the Obama administration in 2015 under then-chair Tom Wheeler, which were reversed by a Republican majority led by former chair Ajit Pai in December 2017. If the pendulum swings back again, it would reclassify broadband as a Title II service which would give the FCC more authority to regulate the internet like a utility. That would prevent service providers from blocking or slowing down online services. Proponents say it would also require broadband providers to be more transparent about their prices and terms of services by requiring a so-called “broadband nutrition label.” An earlier FCC analysis found actual prices paid for broadband to be 40% higher than advertised.
But with a 2-2 deadlock on the Commission, Free Press VP of Policy Matt Wood says nothing can happen until Biden makes his pick to fill the fifth open seat. “The executive order is important, but the processes and personnel to actually move ahead on these priorities are not in place yet,” he said. “Right now the FCC is deadlocked at two Democratic and two Republican votes; the agency needs a fifth commissioner to fully function.”
Acting FCC Chair Jessica Rosenworcel, who was among the administration officials gathered around the President during the signing, did not directly address the net neutrality proposal. But in a statement, she welcomed the 72-point initiative as a way to enhance competition in the American economy and in the communications sector.
“Our economy thrives on competition,” said Rosenworcel. “It is the reason the United States is home to some of the most dynamic companies in the world.”