The Federal government is joining the state attack on unfair non-compete agreements. With the FTC preparing to draft new rules limiting the use of non-compete agreements, what should companies be considering and how can they get involved in the rule-making process?

 

More on Christopher Cox and Joe Spoerl.

 

SPEAKERS

Wayne Stacy, Chris Cox, Joe Spoerl

 

Wayne Stacy  00:00

Welcome, everyone to the Berkeley Center for Law and Technology's Expert Series podcast. I'm Wayne Stacy, the Executive Director for BCLT. And today we're talking about why President Biden raised non compete clauses in his recent executive order. I'm here with two attorneys from Hogan Lovells that are both leading experts in trade secret litigation, both California and across the country. We have Chris Cox, and Joe Spoerl. Welcome to both of you. And thank you for joining us today.

 

Chris Cox  00:34

Thank you, Happy to be here.

 

Joe Spoerl  00:36

Thanks for having us.

 

Wayne Stacy  00:38

Well, let's start with the executive order itself. You know, President Biden's executive order asked the Federal Trade Commission to curtail the unfair use of non compete clauses and other clauses or agreements that may unfairly limit worker mobility. So with everything going on right now, why are noncompetes so interesting that the White House would get involved?

 

Chris Cox  01:04

If you listen to the Biden administration, the president from the very beginning of his administration has said that he's looking out for lower wage workers and blue collar workers so they could have good paying jobs. And if you look at the National landscape, non competes are a creature of state law. And when you look at the changes that have happened recently, most of the protections are for low wage workers and blue collar workers. So places like Maine, have instituted a threshold income for non competes to apply or not apply. And if you're below the threshold, you can't use a non compete. And that's a way to protect people who are in lower level jobs, who are striving to get promotions and get better jobs and non competes prevent them from doing that. And I my sense is that the Biden administration is trying to look out for the blue collar worker or lower wage worker to make sure that there are protections in place for those people.

 

Wayne Stacy  02:12

Well, you mentioned that there are states like Maine, and then we know California has already has restrictions on non compete clauses. I mean, is the issue so pervasive across the country, that the White House and the federal government needs to get involved?

 

Joe Spoerl  02:30

My concerned is that, I mean, if you look at the statistics, they sort of provide some numbers with this order. And so President Biden noted himself, that but you know, one in five American workers without a college degree, are subjected to non compete agreements. And the fact sheet that came out with the order stated that roughly half of private sector businesses require at least some employees to enter non compete agreements. And so they state that that affects some 36 to 60 million workers. And then separately, there was a 2019 report from the economic policy institute that stated that 31.8% of private sector businesses reported that all of their employees had to sign a non compete agreement, regardless of their job duties or compensation, which is, you know, kind of insane. It doesn't matter where you fall in the food chain.