Judge Blocks Federal Trade Commission Rule Banning Non-Compete Clauses on American Workers

A federal judge in Texas is blocking the Federal Trade Commission’s (FTC) rule banning non-compete employment agreements that would have prohibited United States businesses from imposing such clauses on millions of American workers.

On Tuesday, U.S. District Judge Ada Brown ruled that the FTC does not have the authority to issue broad rulemaking regarding non-compete agreements:

In sum, the Court concludes that the FTC lacks statutory authority to promulgate the NonCompete Rule, and that the Rule is arbitrary and capricious. Thus, the FTC’s promulgation of the Rule is an unlawful agency action. The Court grants summary judgment as to Plaintiff’s and Plaintiff Intervenors’ corresponding claim(s) under the Administrative Procedure Act. The Court denies the FTC’s motion for summary judgment. The Court pretermits further discussion of all Parties’ remaining arguments as unnecessary. [Emphasis added]

As a result, Brown’s ruling blocks the FTC non-compete agreement from taking effect on Sept. 4. FTC Chair Lina Khan, favored by anti-monopolist Republicans, has not yet issued a statement on the ruling.

Immediately after the FTC announced the non-compete agreement ban, the U.S. Chamber of Commerce, Business Roundtable, and Texas-based Ryan Tax Firm filed a lawsuit to get the rule thrown out.

Some 30 million Americans in the workforce are estimated to be beholden to non-compete agreements in their employment contracts. The clauses prevent them from working for a competing employer or starting a competing business.

“Because non-compete clauses prevent workers from leaving jobs and decrease competition for workers, they lower wages for both workers who are subject to them as well as workers who are not,” the FTC wrote in its rule.

John Binder is a reporter for Breitbart News. Email him at jbinder@breitbart.com. Follow him on Twitter here.