Federal judge blocks FTC’s rule banning noncompete agreements

The Federal Trade Commission’s (FTC) plan to ban noncompete agreements in the workplace is no longer happening, as of now. On Tuesday, Aug. 20, a federal judge in Texas blocked the new rule that would have made it easier for employees to quit a job and go work for a competitor or start a competing business.

U.S. District Judge Ada Brown in Dallas ruled the FTC “exceeded its statutory authority” in making its decision back in April. The judge concluded the ban would cause “irreparable harm.”  

“The Commission’s lack of evidence as to why they chose to impose such a sweeping prohibition…instead of targeting specific, harmful noncompetes, renders the Rule arbitrary and capricious,” Brown wrote.

The rule was to take effect on Sept. 4 with the FTC arguing noncompete agreements restrict workers’ freedoms and suppress wages.

FTC spokesperson Victoria Graham said the agency is disappointed in the judge’s ruling. According to Graham, the FTC is considering an appeal.

“Today’s decision does not prevent the FTC from addressing noncompetes through case-by-base enforcement actions,” Graham said in a statement.