Joe Biden Keeps Making Work Better, For Workers
It's a double Nice Time!
Some nice time news for workers this week, with new rules from two different federal agencies. Yes, there goes Joe Biden again, using the government to make changes that make life better for ordinary Americans instead of for corporations and the super rich.
Take This Noncompete Agreement And Shove It
First up, the Federal Trade Commission voted on Tuesday to ban most noncompete agreements for all US employees at every level. Those are those employment pre-nup documents that employers often forced workers to sign — even at sandwich shops — to prevent them from taking a job at a competitor.
Noncompete agreements were supposedly needed to keep people from stealing important “trade secrets” — like “Arby’s barbecue sandwiches contain 30 percent roadkill” — to competing businesses. But in reality, the agreements mostly just tended to suppress wages and keep people from changing jobs or starting their own businesses. That’s why Joe Biden has been calling for an end to the damn things since his 2023 State of the Union address.
Once the new rule goes into effect, after 180 days to give businesses time to comply, hundreds of millions of American workers will be free to get better jobs, and genuinely secret trade secrets should remain protected by intellectual property laws anyway. During the public comment period for the proposed rule, the FTC received more than 26,000 comments, almost all of which (around 25,000) said fuck yeah.
The FTC will keep one category of non-compete agreement in place: “Senior executives” who are in a “policy-making position” and earn more than $151,000 per year will still be constrained by existing agreements, but only those signed before the new rule’s effective date.
All told, the FTC estimated that the new rule will increase wages by as much as $488 billion over the next decade, amounting to a $524 increase in annual wages for the average worker. It could also drive the creation of as many as 8,500 new businesses each year. (Oh no! Those new businesses would compete with established businesses, and then what would entrenched businesses ever do?)
In an interview with the progressive labor media outfit More Perfect Union, FTC Chair Lina Khan said,
“Right now workers are stuck in place because of these noncompetes. […] So even if they get a better job opportunity with higher wages, with better benefits, they can't actually switch jobs, which is bad for those workers. It's also bad for other workers who won't have the opportunities that are not being created because of these noncompetes.”
Oh, look, here is some accompanying video content!
Not surprisingly, the very idea of banning noncompete agreements has been met by business interests with something akin to the warm embrace of Donald Sutherland at the end of Invasion of the Body Snatchers. Prior to Tuesday’s FTC meeting, the US Chamber of Commerce already planned to file suit against it as soon as today if the vote went through. A Chamber bigwig griped to Bloomberg News that the rule “opens up a Pandora’s box where this commission or future commissions could be literally micromanaging every aspect of the economy,” which sounds really bad until you remember that’s the standard reply of pro-business groups to every regulation ever. Free markets and competition make for great talking points, but profits are easier when you don’t have to contend with ‘em.
As More Perfect Union notes, the new rule will offer more flexibility to workers at every level, as exemplified by comments submitted to the FTC during the rulemaking process. One commenter who works at Home Depot said that he had sought work as a sales representative with several tool companies, but was
“told I would get the job if not for a noncompete agreement with Home Depot. […] So instead of doing the exact same thing for 70K plus bonuses, I was stuck in abject poverty trying to provide for my wife and disabled toddler.”
Noncompete agreements even have an impact on healthcare costs, by making it harder for physicians to move to other practices. Roughly half of doctors are constrained by noncompetes, according to the American Medical Association, which backed the rule change. The FTC estimates that over 10 years, getting rid of noncompete agreements will bring “$74-$194 billion in reduced spending on physician services over the next decade.”
In a comment to the FTC in February, a doctor wrote that because of noncompete rules preventing him from taking a new position with any other practice within a 30-minute travel distance from his current job, he would have to “uproot my family if I ever wanted to consider a new job. It limits my freedom to choose where I work when considering all aspects of life. It gives my current employer power in negotiating when negotiating my contract.”
I think we would all like to see doctors who aren’t seething with resentment, probably.
Oh, Joe Biden Also Just Gave Millions Of Workers More Overtime Pay!
Also on Tuesday, the Labor Department finalized a new rule that will greatly expand the number of workers who are eligible for overtime pay, meaning millions more Americans will be able to make time-and-a-half when they work more than 40 hours a week. Here are the deets, per More Perfect Union again:
The Department of Labor’s new rule expands the threshold for mandatory overtime to all salaried workers making up to $58,656 per year who work more than 40 hours a week. Under the previous rule, employers were only required to pay overtime to certain workers making up to $35,568—well below the median U.S. salary.
The updated threshold, proposed last year, will expand overtime eligibility to more than 3.5 million more workers. Effective July 1, 2024, the salary threshold will increase to $43,888 and again to $58,656 on Jan. 1, 2025. The rule also requires that salary thresholds be automatically updated every three years based on up-to-date wage data.
The new overtime rule also gets rid of a loophole that exempted “managers” and “supervisors” from overtime pay requirements. We are sure you will be shocked, shocked to learn that businesses exploited the old rule by giving hourly workers bogus job titles to avoid paying overtime to “roadkill meat cleaning manager” or “lead feral hog de-tusker.” A recent study by the National Bureau of Economic Research determined that firms “avoid roughly 13.5% in overtime expenses for each strategic ‘manager’ hired during our sample period,” a practice that totaled to businesses avoiding $4 billion in overtime pay.
As More Perfect Union notes, the new rule is part of the Biden administration’s effort to
reverse a decades-long shift away from overtime protections. As recently as 1975, more than 60 percent of the American workforce was eligible for time-and-a-half; as of 2022, that number was down to around 13 percent.
“This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid more for that time,” Acting Labor Secretary Julie Su said in a statement. “Too often, lower-paid salaried workers are doing the same job as their hourly counterparts but are spending more time away from their families for no additional pay. That is unacceptable.”
And yet again, the corporate greedheads are already planning to sue over the new rule, because where does the government get the idea it can tell businesses and workers they can’t freely choose how little the workers will be paid for their labor? Back in 2014, that socialist Barack Obama tried to make overtime rules apply to anyone making under $47,000 a year, but brave business groups and Republican state attorneys general sued, finally getting the rule struck down in 2017. And that was even before Donald Trump loaded up the federal judiciary with Federalist Society idiots.
Still, credit to Biden’s Labor Department for taking another shot at the matter, with rules designed with the lessons from that 2017 defeat in mind. Here’s hoping the new approach survives the new legal landscape, and that the Supreme Court won’t ultimately decide that 14th-century rules governing serfdom mean it’s unconstitutional.
[More Perfect Union / FTC / Reuters / More Perfect Union / Labor Department]
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I got recruited by three companies back in 2017 when the one I worked for closed suddenly just because the owner had had enough (not because we weren't successful, won't waste the pixels here). One company was managed by someone I had been in the biz with since 1990 off and on. They had a no compete clause (they had sued former employees and won) which was a non-starter for me. My coworker wound up there and it has been misery for her. I tried to get her to come to our place at a different position, circumventing the NC clause but she was scared. And now she doesn't have to be.
This is like Independence Day for me, because she is free. She is in her mid-60s, a year into widowhood, no other education other than a HS diploma and this industry is all she has known since the age of 18. Her company knows this and has taken advantage of it. I can't wait to tell her.
Thank you Joe Biden.
Listening to NPR this morning on the drive to work, they touched on an evidently a big problem with Non-Competes. If a man or a woman found themselves in a toxic/abusive work environment, they were stuck. And some of the stories shared were awful leaving them trapped in these situations with almost no recourse but a financial death dive.