As the federal government begins carrying out President Joe Biden’s executive order “on promoting competition in the American economy,” local businesses affected by some of the measures are beginning to prepare for the ripple effects.
Biden’s order, signed July 9, reaches wide, guiding many of the departments under his executive purview toward stopping commercial consolidation and freeing employees from what are deemed restrictive corporate practices.
Among those targeted practices are noncompete clauses that companies use in contracts to keep employees from leaving their staff to join those of competitors.
“Powerful companies require workers to sign noncompete agreements that restrict their ability to change jobs,” the order reads.
According to the White House, one-third of American companies use such agreements, which often ban employees from working with competitors within certain distances for a given period of time.
It is unclear how many companies in the Dubuque area do so.
According to the Dubuque Area Chamber of Commerce, these clauses are widespread among industries that deal in sales or intellectual property — such as financial services and insurance companies, marketing strategists and manufacturing companies — which include some of the area’s biggest employers.
Chamber Vice President of Government and External Affairs Ryan Sempf said that while he did not know if one-third of area employers used noncompetes, he doubted that one-third of employees worked under them. He also said he was unsure of claims in the order that noncompete agreements hurt competition.
“The presence of noncompete agreements goes to show that employers are worried about losing their talent to other employers,” Sempf said. “Although it looks like they would reduce competition, they’re just as much a sign that we have a thriving and competing market right now.”
This is not the first time a president recently has sought to reduce noncompete clauses in the marketplace. President Barack Obama asked states to rein in their use in 2016. Since then, 16 states have taken up that challenge, including Illinois.
In 2020, President Donald Trump’s Federal Trade Commission held a public workshop on whether it should use its rule-making authority to restrict them nationwide.
Biden’s order officially directs FTC to consider exercising its authority “to curtail the unfair use of noncompete clauses and other clauses or agreements that may unfairly limit worker mobility.”
This year, the Iowa Senate passed a bill that would ban noncompetes for employees who made $14.50 per hour or less. The bill made it to the Iowa House of Representatives Commerce Committee shortly before the end of the 2021 session but remained there.
Another measure in Biden’s executive order takes aim at occupational licensing requirements it deems too restrictive.
“While many occupational licenses are critical to increasing wages for workers and especially workers of color, some overly restrictive occupational licensing requirements can impede workers’ ability to find jobs and move between states,” the order states.
On that point, Dubuque chamber staff agreed wholeheartedly.
“There are a lot of employers, and we’ve heard from them, (talking) about the value of licensing reform and allowing them to move employees where help is needed — between states especially, with Iowa touching Wisconsin and Illinois,” Sempf said.
Kelly Heysinger is a co-owner of Unified Therapy, a physical, occupational, speech and behavioral therapy provider with clinics in Dubuque and Fennimore, Wis. She said she and her staff have had to deal with the different licensing requirements between states.
“I’m licensed in all three states. And the documents I needed to provide — the transcripts, certifications, previous experience — are all very similar but are all tied up with different state government processes,” she said.
Heysinger said those licenses come with fees as well and that the whole process can take up to three months.
“That not only hurts us employers but also hurts my patients who could possibly have a delay in their delivery of care,” she said. “If my Wisconsin therapist is out, I can’t send any of my Iowa therapists over there because they have to have their Wisconsin license. So, patients end up getting canceled, rescheduled, etc. This is similar across different health care providers.”
Biden’s order directs only his federal agencies. States all have their own rules. But the order also states the policy of the Biden administration to support “aggressive” legislative moves to make some of these changes permanent nationally.
Staff with Greater Dubuque Development Corp. said they did not know enough about local impacts of the order to comment for this story.