A flurry of new rules from the Biden administration attempt to ban noncompetes, boost overtime pa... - 5 minutes read

The Biden administration this week pushed out a slate of rules it says are meant to boost competitiveness and put more money into workers' pockets.

There are already challenges to at least one of the rules — but together they could land overtime pay for millions more workers, ban noncompetes that prevent workers from moving into jobs in similar industries, and help people get automatic refunds for delayed or canceled flights.

"By increasing competition, these rules give workers their fairly earned wages and gives consumers more power to purchase the best option," Lael Brainard, the director of the National Economic Council, told Business Insider.

More workers eligible for overtime pay

Under the Department of Labor's new rule, many workers who make under $43,888 will be eligible for overtime pay effective July 1. That's nearly $10,000 higher than the existing threshold of $35,568; next January it's set to rise to $58,656.

The department estimates the change will affect 4 million workers.

Judy Conti, the government affairs director at the National Employment Law Project, previously told BI that "the current salary threshold beneath which all workers are entitled to overtime is pitifully low."

In 2016, a federal judge blocked a similar attempt to raise the cutoff.

Automatic refunds for canceled or delayed flights

The Department of Transportation announced a new rule that would mean travelers get refunds automatically when their flights are canceled or delayed for over three hours domestically and six hours internationally.

The department also said it was looking to ensure that parents are able to sit with their children without having to pay extra.

"Passengers deserve to get their money back when an airline owes them — without headaches or haggling," Transportation Secretary Pete Buttigieg said in a statement.

A ban on noncompetes that keep workers from taking new jobs

Perhaps the most sweeping action for workers came from the Federal Trade Commission, which finalized a rule to ban noncompetes in most cases. That means workers would no longer be restricted from taking roles in similar industries or starting up new businesses in the same field.

"For workers and employers, it tilts that playing field back more in favor of workers," Brainard said.

The agency estimates the new rule will lead to 8,500 more new businesses every year — a 2.7% increase in business formation — and an average of $524 extra annually for workers. That's not chump change for many Americans, especially those with lower wages who have ended up stifled in finding new work.

"These new regulations will promote healthier labor-market competition," Aaron Sojourner, a senior researcher at the W.E. Upjohn Institute for Employment Research, told BI. "One in five American employees will benefit from the new freedom to accept job offers from any competing employer rather than live bound to their current employer, unable to work for many employers who value their skills and time more."

That rule is already getting pushback from businesses and business interests. Ryan, a company that provides tax services and software, said it filed a lawsuit against the FTC, accusing it of taking "lawless action."

"With history, logic, law, and the Constitution on our side, we look forward to righting this wrong by the FTC against employees and employers alike," John Smith, Ryan's chief legal officer and general counsel, said in a press release.

The US Chamber of Commerce, the Business Roundtable, and the Texas Association of Business have also sued to block the rule.

"The Federal Trade Commission's decision to ban employer noncompete agreements across the economy is not only unlawful but also a blatant power grab that will undermine American businesses' ability to remain competitive," Suzanne Clark, the president and CEO of the Chamber of Commerce, said in a statement.

Jeremy Merkelson, a partner at the law firm Davis Wright Tremaine, speculated that the groups challenging the rule were likely to succeed. Merkelson said that while a Supreme Court majority would "likely reject that such a broad concept gives the FTC specific authority to upend millions of worker contracts," a court might let the ban on noncompetes survive for lower-level workers while invalidating the rule for senior executives.

Brainard argued that "a lot of Republicans and some of the businesses and special interests that they're supporting will try to challenge these actions because it means that they have to pass on savings to consumers," adding, "They have to lower prices; they have to give working families a break."

Elizabeth Wilkins, the former chief of staff to the chair and director of the Office of Policy and Planning at the FTC, described noncompetes as "fundamentally at odds" with the American promise of being able to find opportunities that fit workers' skills and talents. Zooming out, she said, the ban might make a labor market with less friction, where workers can match with employers that make sense for them, boosting productivity.

"To me," Wilkins said, "this rule represents the absolute best of government working for people."

Will a ban on noncompetes, new overtime thresholds, or airline refunds affect your life? Contact this reporter at jkaplan.com.

Source: Business Insider

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