Federal judge in Texas strikes down FTC's ban on noncompete agreements
A Texas federal judge has blocked the FTC's ban on noncompete agreements, ruling the agency lacks authority. The FTC plans to appeal, claiming the ban is essential for fair competition.
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A federal judge in Texas has ruled against the Federal Trade Commission's (FTC) attempt to ban noncompete agreements, which restrict workers from changing jobs or starting new businesses. Judge Ada Brown of the Northern District of Texas granted a motion for summary judgment from a tax services firm and business groups, stating that the FTC lacks the authority to issue such a ban. The ruling nullifies the FTC's Non-Compete Rule, which was set to take effect on September 4, 2024. The judge previously issued a preliminary injunction that delayed the rule's enforcement but has now issued a final judgment blocking it entirely. The FTC plans to appeal the decision, arguing that noncompete clauses are unfair methods of competition under Section 5 of the FTC Act. The agency claims that approximately 30 million U.S. workers are affected by noncompete clauses. The ruling has been welcomed by business groups, including the U.S. Chamber of Commerce, which views it as a victory against government regulation of business practices.
- A Texas federal judge has blocked the FTC's ban on noncompete agreements.
- The ruling states the FTC lacks authority for substantive rulemaking on this issue.
- The FTC plans to appeal the decision, asserting the ban is necessary for fair competition.
- Approximately 30 million U.S. workers are reportedly bound by noncompete clauses.
- Business groups have praised the ruling as a win against regulatory overreach.
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