The Federal Trade Commission’s new rules that effectively ban non-compete agreements in businesses, agreements that prevent a released person from competing in the same market as their previous business, was struck down by U.S. District Judge Ada Brown from the Dallas Court.
She wrote in her decision “The Court concludes that the FTC lacks statutory authority to promulgate the Non-Compete Rule, and that the Rule is arbitrary and capricious. Thus, the FTC’s promulgation of the Rule is an unlawful agency action. (The rule) is hereby SET ASIDE and shall not be enforced or otherwise take effect on September 4, 2024, or thereafter.”
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Excerpt from CNN
US judge strikes down Biden administration ban on worker ‘noncompete’ agreements
A federal judge in Texas on Tuesday barred a US Federal Trade Commission rule from taking effect that would ban employers from requiring their workers to sign non-compete agreements.
The ban, which had been scheduled to go into effect nationwide on September 4, is now effectively blocked.
US District Judge Ada Brown in Dallas said the FTC does not have the authority to ban practices it deems unfair methods of competition by adopting broad rules.
“The Court concludes that the FTC lacks statutory authority to promulgate the Non-Compete Rule, and that the Rule is arbitrary and capricious. Thus, the FTC’s promulgation of the Rule is an unlawful agency action,” Brown wrote in her order. “(The rule) is hereby SET ASIDE and shall not be enforced or otherwise take effect on September 4, 2024, or thereafter.”
Brown had temporarily blocked the rule in July for a small number of employers while she considered a bid by the US Chamber of Commerce, the country’s largest business lobby, and tax service firm Ryan to strike it down entirely.
