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A federal judge on Wednesday delayed the Sept. 4th implementation of a ban on non-compete agreements for workers.
“While this order is interim, the Court intends to rule on the final merits of this action no later than August 30, 2024,” Judge Ada Brown of the U.S. District Court for the Northern District of Texas wrote.
The ban, which prohibits employers from adding non-compete clauses to most existing employment contracts and bars companies from adding non-compete clauses to future employment agreements, was approved by the Federal Trade Commission in April.
Within a day of the FTC’s approval, the agency was sued by Ryan LLC, a Texas-based tax services and software provider, as well as a separate lawsuit from the U.S. Chamber of Commerce and other business groups.
The FTC estimates that 30 million American workers — one in five — are bound by non-compete clauses in their current jobs. For most of them, it argues, these clauses limit the freedom to change jobs, lower wages, stifle innovation, prevent entrepreneurs from starting new businesses, and undermine fair competition.
In a statement, the U.S. Chamber of Commerce cast the preliminary injunction as a victory. “The FTC’s blanket ban on competing is an illegal power grab that ignores the agency’s constitutional and statutory authority and sets a dangerous precedent that the government knows better than the marketplace. The U.S. Chamber of Commerce will continue to hold the FTC accountable in court,” said Darryl Josepher, the group’s chief counsel.
In response to the order, FTC spokesman Douglas Faller said, “The FTC maintains its clear authority to issue this rule, backed by statute and precedent. We will continue to fight to free hard-working Americans from unlawful non-compete clauses that stifle innovation, stifle economic growth, trap workers, and undermine Americans’ economic freedom.”
On the other hand, the court’s order does not prevent the FTC from taking enforcement action against non-compete agreements on a case-by-case basis.
This is breaking news and will be updated.
