Federal Judge Strikes Down Ban On Worker 'Noncompete' Agreements

U.S. District Judge Ada Brown in Dallas blocked the FTC's rule banning noncompete agreements, arguing the FTC lacks authority to implement such broad regulations and did not adequately justify the sweeping prohibition. Reuters reports: Brown had temporarily blocked the rule in July while she considered a bid by the U.S. Chamber of Commerce, the country's largest business lobby, and tax service firm Ryan to strike it down entirely. The rule was set to take effect Sept. 4. Brown in her ruling said that even if the FTC had the power to adopt the rule, the agency had not justified banning virtually all noncompete agreements. "The Commission's lack of evidence as to why they chose to impose such a sweeping prohibition ... instead of targeting specific, harmful non-competes, renders the Rule arbitrary and capricious," wrote Brown, an appointee of Republican former President Donald Trump. FTC spokesperson Victoria Graham said the agency was disappointed with the ruling and is "seriously considering a potential appeal.""Today's decision does not prevent the FTC from addressing noncompetes through case-by-base enforcement actions," Graham said in a statement. The Democratic-controlled FTC approved the ban on noncompete agreements in a 3-2 vote in May. The commission and supporters of the rule say the agreements are an unfair restraint on competition that violate U.S. antitrust law and suppress workers' wages and mobility.

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