On September 4, a new Federal Trade Commission (FTC) rule went into effect that would ban non-compete clauses. America was a few weeks away from a country where no employer could prevent workers from taking a job with a competitor, but that didn’t happen. On Tuesday, a federal judge blocked the ban from happening.
The FTC has been investigating the issue of non-competes for years. It first proposed legislation against them in 2023 and announced a formal ban in April.
“Non-compete clauses keep wages low, stifle innovation, and rob the American economy of energy, including the more than 8,500 new startups that would be created each year if non-competes were banned,” FTC Chairwoman Lina M. Khan said in a statement. the time. “The FTC’s final antitrust rule will ensure that Americans have the freedom to pursue a new career, start a new business, or bring a new idea to market.”
The rule would take effect 120 days after it was entered in the Federal Register and would eliminate existing noncompetes. The US Chamber of Commerce was strongly opposed to the ban and promised to take legal action.
The Chamber found willing plaintiffs in Texas when Judge Ada Brown of the US District Court for the Northern District of Texas ruled in its favor.
“The court sets aside the Non-Compete Act…and the Act will not be implemented or effective on or after September 4, 2024,” Brown said in his brief decision.
The Chamber called it a victory for business owners.
“This decision is a great success in the struggle of the Chamber to fight against the government’s small management of business decisions. The FTC’s massive prohibition of non-compete agreements was an illegal extension of power that would have put American workers, businesses, and our economy at a competitive disadvantage,” the Chamber of Commerce said in a statement on its website. “We are committed to holding the FTC — and all agencies — accountable, ensuring that the law American workers and businesses can thrive.”
The FTC said it would appeal the decision. “We are disappointed in Judge Brown’s decision and will continue to fight to stop the competition that restricts the economic freedom of hard-working Americans, stifles economic growth, reduces innovation, and depresses wages.” We are seriously considering a potential complaint,” the FTC told The Verge.
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