A federal ban on noncompete agreements, aimed at protecting workers’ ability to switch jobs and earn higher wages, has been permanently halted by a federal judge in Texas.
The Federal Trade Commission’s (FTC) rule, which was set to take effect on September 4 and intended to prevent individuals from being bound by noncompete agreements, has been deemed unauthorized by the judge.
The big picture: Approximately 30 million Americans, accounting for 1 in 5 workers, are currently under noncompete agreements spanning across various industries like tech and fast-food.
- The decision by U.S. District Judge Ada Brown effectively blocks the implementation of the FTC’s ban on noncompetes, meaning existing noncompete agreements will remain enforceable.
What we’re watching: The FTC is contemplating an appeal against the ruling, expressing disappointment and a commitment to fight against noncompetes that hinder economic liberty, limit innovation, and suppress wages.
Driving the news: The lawsuit challenging the ban was filed by the U.S. Chamber of Commerce and a Texas tax firm, which argued that the rule was overly broad and represented an overreach of authority by the FTC.
