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- Court Blocks FTC Noncompete Rule
On August 20, a federal judge permanently blocked the implementation of a Federal Trade Commission (FTC) regulation that would have banned new noncompete agreements for all workers and require companies to let current and past employees know they will not enforce them. The US Chamber of Commerce, Business Roundtable, and other business entities had challenged the FTC rule in court.
In her ruling, the US District Court for the Northern District of Texas judge deciding the case stated that: “The FTC lacks substantive rulemaking authority with respect to unfair methods of competition. The role of an administrative agency is to do as told by Congress, not to do what the agency thinks it should do.” The FTC is considering a potential appeal.
On April 23, the FTC issued its final rule to ban noncompete agreements that prevent employees from working for competitors or starting a competing business after they leave a job. The FTC determined that it was an unfair method of competition, and therefore a violation of Section 5 of the FTC Act, for employers to enter into noncompetes with workers and to enforce certain noncompetes. The rule was set to go into effect on September 4.