Breaking news came out last week indicating that President Joe Biden is preparing to sign an executive order which would call on the Federal Trade Commission (FTC) to curtain non-compete agreements for workers.
The fact sheet on this executive order, published on whitehouse.gov, states the following:
- 75% of U.S. industries have seen an acceleration of corporate consolidation, especially in healthcare, agriculture and financial services.
- The resulting lack of competition drives up prices for consumers.
- Barriers to competition include fewer employers and decreased opportunities to bargain for a higher wage.
- Advertised wages have decreased by as much as 17% in some sectors.
- Inadequate competition limits economic growth and limits opportunities for individuals.
“Today’s historic Executive Order established a whole-of-government effort to promote competition in the American economy. The Order includes 72 initiatives by more than a dozen federal agencies to promptly tackle some of the most pressing competition problems across our economy. Once implemented, these initiatives will result in concrete improvements to people’s lives.”
Issues Around Competitive Pay and Workers Rights
Here is how reporters are interpreting both this ruling and the broader set of rulings meant to promote competitive pay and workers rights:
- The order calls upon the FTC to adopt rules that curtail worker non-compete agreements.
- The White House press secretary related the ruling to campaign promises to “promote competition in labor markets.”
- A related action would also call the FTC to ban certain occupational licensing requirements, which are deemed unnecessary and unduly burdensome.
- Another related action encourages both the FTC and Department of Justice to limit an employers’ right to share information about worker pay, stating it could have a negative impact on job seekers.
This ruling is part of a set of executive actions that have the stated purpose of increasing competition in the market. Many analysts are connecting it back to a 2016 executive order by President Barack Obama, which called on federal agencies to initiate action against anti-competitive behavior. During President Donald Trump’s office, regulatory policies were largely tabled. In fact, President Biden spoke to this frequently in his campaign, stating that non-compete clauses “hinder the ability of employees to seek higher wages, better benefits, and working conditions by changing employers.”
How May This Impact the Medical Field?
At the July 7 press briefing on this executive order, the White House Press Secretary explained that 30 million people in the U.S. are impacted by non-competes. A Medscape poll, conducted in April, showed that 90% of physicians are currently or have previously been bound by non-competes. 23% had tried (unsuccessfully) to negotiate either way out of the agreement. 6% of physicians under non-competes were forced to find different types of work altogether, after leaving their position.
Non-competes are an immensely important part of physician contracts. As a professional contract reviewer (I’ve worked with more than 10,000 contracts), I regularly enter negotiations around non-competes. While the notion of a game-changing executive order that instantly changes the playing field is appealing, it may not be as quick or easy as that.
One common thought out there we’ve heard from many:
“I would think the federal government has the power to regulate non-competes for federal agencies, and probably federal contractors, but I don’t think they can regulate non-competes for any other employers, which should be the purview of the states.”
Physician Contracts and Non-Competes
While the executive order is framed in a positive light, the outcomes remain unclear. For physicians, negotiating a contract from the outset is a high priority. To get locked into a limiting non-compete clause could delay important, strategic career moves. If you are in the process of negotiating a contract, or have questions about what your options are, our team can help. Reach out to learn more.