Written by 11:24 Business

Judge Backs Challenge to F.T.C.’s Noncompete Ban, at Least for Now

A federal judge on Wednesday backed an initial legal challenge to the Federal Trade Commission’s ban on noncompete agreements, which is scheduled to take effect in September.

Judge Ada Brown granted an injunction requested by several plaintiffs, saying the ban cannot be enforced against them pending a final ruling.

But while the ruling is preliminary, she said that the F.T.C. lacked “substantive rule-making authority” with respect to unfair methods of competition and that the plaintiffs were “likely to succeed on the merits” of their challenge.

Judge Brown, of U.S. District Court for the Northern District of Texas, said she expected to issue a final decision by the end of August.

The commission “stands by our clear authority, supported by statute and precedent, to issue this rule,” said Douglas Farrar, an F.T.C. spokesman. He added that the agency would “keep fighting” noncompetes in an effort to promote worker mobility and economic growth.

In April, the tax firm Ryan L.L.C. sued to block the near-total ban on noncompetes, just hours after the F.T.C. voted 3 to 2 to adopt the rule. The U.S. Chamber of Commerce later joined the case as a plaintiff, as did the Business Roundtable and two Texas business groups.

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Last modified: 4 July 2024
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