Federal judge upholds FTC ban on noncompete agreements
A federal judge upheld the FTC's ban on noncompete agreements, affecting 30 million U.S. workers. ATS Tree Services plans to contest the ruling amid ongoing legal disputes over the FTC's authority.
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A federal judge has upheld the Federal Trade Commission's (FTC) ban on noncompete agreements, rejecting a challenge from ATS Tree Services. The FTC's rule, effective September 4, prohibits new noncompete agreements and mandates that companies inform current and former employees that existing agreements will not be enforced, with exceptions for senior executives. Approximately 30 million workers in the U.S. are currently bound by such agreements, which span various industries. U.S. District Judge Kelley Hodge affirmed the FTC's authority under the 1914 Federal Trade Commission Act to regulate unfair competition practices, stating that the ban is necessary to enhance worker mobility and economic growth. ATS Tree Services argued that the ban would harm their business model, which relies on noncompete agreements to protect employee training investments. The company expressed disappointment in the ruling and plans to continue contesting the FTC's authority. In a related case, a Texas federal judge has temporarily blocked the FTC from enforcing the rule against a coalition of business groups, with a decision on the merits expected by August 30, 2024. The conflicting rulings highlight ongoing legal disputes regarding the FTC's regulatory powers and the future of noncompete agreements in the workforce.
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6 commentsMy instinct is a somewhat narrower scope ban might have had a better chance of surviving? 80% of bans are totally overbroad and silly (affecting folks not earning > $150K). > $150 - $200K some kind of provisions (ie, up to 3 or 6 months gardening leave max) would be in line with some international approaches. This time is still paid for by the employer, and is due even if employee quits.
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