Texas Court Halts FTC's Ban on Noncompete Agreements

Money | July 4, 2024, 4:43 p.m.

The Federal Trade Commission's ban on noncompete agreements, set to take effect on September 4, has been postponed by a Texan court siding with plaintiffs in a lawsuit challenging the rule. The FTC's decision to ban noncompetes in April aimed to boost innovation and protect workers' rights and wages, but faced backlash from companies like Ryan LLC and the US Chamber of Commerce. While FTC Chair Lina M. Khan believes noncompetes keep wages low and stifle economic growth, Chamber of Commerce's Daryl Joseffer argues it's government overreach. US District Judge Ada Brown has temporarily blocked the rule, stating the FTC lacks rulemaking authority and the plaintiffs are likely to succeed in overturning the ban. The court will make a final decision by August 30, fueling a contentious debate over the government's role in industry regulation.