U.S. federal judge overturns FTC rule, non-compete agreement remains in effect

This site reported on August 21 that a federal judge in Texas, USA, ruled on Tuesday that the Federal Trade Commission’s (FTC) ban on non-compete agreements exceeded the scope of its authority and therefore overturned the regulation.

Photo source Pexels The regulation, originally scheduled to take effect on September 4, aims to prohibit employers from requiring employees to sign non-compete agreements to prevent them from jumping to rival companies. Dallas-based tax firm Ryan LLC, the U.S. Chamber of Commerce, the American Business Roundtable and other business groups sued to block the rule from taking effect, saying the FTC overstepped its authority and would make it harder for companies to retain talent.
In a 27-page decision, U.S. District Court Judge Ada Brown held that the FTC lacked the legal authority to issue the rule, calling it “arbitrary and arbitrary.” “The FTC’s conduct in promulgating this rule was an unlawful administrative action,” Judge Brown wrote in the decision.
FTC spokesperson Victoria Graham said: “We are disappointed with Judge Brown’s ruling and will continue to work to block non-compete agreements that restrict the economic freedom of hard-working Americans, hinder economic growth, limit innovation and drive down wages. We are seriously considering the possibility "Today's ruling will not prevent the FTC from handling non-compete agreements through case-by-case enforcement actions."
According to our understanding, non-compete agreements usually appear in employment contracts and require employees not to join them for a certain period of time after leaving the company. Competitor companies or perform similar work. The agreement has been controversial, with supporters arguing it protects companies' trade secrets and opponents arguing it limits employees' employment freedoms and could lead to lower wages.

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