Biden Administration’s Labor Competition Focus Expands to Bank Noncompetes

Under the proposed overhaul announced last week, deals involving banks that would hold assets exceeding $100 billion would face intensified FDIC scrutiny. Additionally, the revised guidelines explicitly prohibit the enforcement of noncompete agreements for employees at covered banks across all sizes in certain contexts. According to Bloomberg, this move aligns with a broader governmental effort to address contracts that inhibit employee mobility, as highlighted by antitrust and employment law experts.

Evan Starr, an associate professor at the University of Maryland specializing in noncompete research, emphasized the broader federal push towards enhancing labor market competitiveness. He noted, “We’ve seen a reconsideration of how various federal agencies can make labor markets more competitive. Noncompetes have been part of that discussion.”

The FDIC’s stance sets it apart from other federal banking regulators, as it becomes the lone agency among the three with authority over approving mergers to propose the avoidance of noncompete agreements for affected bank employees. Unlike the Office of the Comptroller of the Currency and the Federal Reserve, which primarily oversee larger banks and holding companies, the FDIC’s measures aim to curb noncompete clauses.

Read more: Dysfunction Junction: U.S. Merger Review Under the Biden Administration

The decision to focus on noncompetes coincides with broader regulatory actions. The Federal Trade Commission (FTC) is poised to finalize a proposal to ban noncompetes nationwide, while the National Labor Relations Board (NLRB) has asserted that such agreements largely contravene federal labor law.

Evan Starr remarked to Bloomberg on the unprecedented level of regulatory scrutiny on employment contract nuances, noting, “I don’t think we’ve ever seen so much regulatory scrutiny on the fine print of employment contracts—and it’s coming from all angles.”

The move underscores the Biden administration’s commitment to fostering fair competition within the labor market and signifies a significant shift in regulatory focus within the banking sector. As discussions continue and regulatory measures take shape, the landscape of employment contracts and labor practices in the banking industry may undergo substantial transformation.

Source: News Bloomberg Law