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 agreements commonly signed by workers not to join their employers’ rivals or launch competing businesses.

A federal judge in Texas on Tuesday barred a US Federal Trade Commission rule from taking effect that would ban agreements commonly signed by workers not to join their employers’ rivals or launch competing businesses. US District Judge Ada Brown in Dallas said the FTC, which enforces federal antitrust laws, does not have the authority to ban practices it deems unfair methods of competition by adopting broad rules. Brown had temporarily blocked the rule in July 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. The rule was set to take effect September 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.”