Federal judge overturns FTC’s ban on noncompete clauses

A federal judge struck down the ban on noncompete clauses by the Federal Trade Commission (FTC) that was set to take effect in September.

The ruling, handed down Tuesday by U.S. District Court Judge Ada Brown, came after the U.S. Chamber of Commerce and other business groups sued the FTC. The Chamber and business groups claimed the FTC did not have the authority to ban noncompetes. Brown, of the U.S. District Court for the Northern District of Texas, entered a stay against the FTC on July 3, which had already prevented the agency from preparing to enforce compliance against the plaintiffs.

Brown agreed with the chamber’s argument that the agency’s noncompete ban “exceeds the FTC’s statutory authority; it is patently unconstitutional; and it is arbitrary and capricious—thus entitling plaintiffs to summary judgment.”