Court overrules FTC’s non-compete ban: setback for anti-competitive efforts
A Texas federal court has invalidated the Federal Trade Commission’s (FTC) new ban on non-compete clauses.
Judge Ada Brown ruled that the FTC overstepped its authority and found the ban to be “arbitrary and capricious.”
Scheduled to take effect on Sept. 4, the rule aimed to prevent employers from restricting workers’ future job opportunities.
However, Brown determined the FTC’s authority is limited to procedural regulations rather than sweeping rules, and the ban’s broad approach lacked a “rational connection” to its goals.
The ruling follows a similar block from a Florida court and contrasts with a recent Pennsylvania decision.
The FTC had argued its mandate covered such regulations, but the court’s decision poses a significant obstacle to its anti-competitive reforms.
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