A federal judge in Texas, Ada Brown, ruled against a U.S. Federal Trade Commission (FTC) rule that would have banned noncompete agreements, which prevent workers from joining competitors or starting rival businesses. The judge argued that the FTC lacks the authority to impose such a broad ban and criticized the agency for not providing sufficient evidence to justify the rule. The rule was initially set to take effect on September 4 but was temporarily blocked in July.
The U.S. Chamber of Commerce and tax firm Ryan, which opposed the rule, claimed that it would harm businesses and the economy. The FTC, disappointed with the ruling, is considering an appeal. The agency typically targets specific industries with its rules, and business groups argue that Congress did not intend to give the FTC broad powers to ban widespread business practices like noncompetes. This ruling is part of a broader legal debate, with other courts offering differing opinions on the validity of the FTC’s rule.
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