The Federal Trade Commission’s (FTC) attempt to ban noncompete agreements has been thwarted by a federal judge in Texas. US District Judge Ada Brown ruled that the agency lacks the authority to enforce the ban, which was set to go into effect on September 4. According to The Washington Post, Judge Brown criticized the FTC for not considering evidence supporting noncompetes and only relying on flawed empirical evidence. FTC Chair Lina M. Khan argued that noncompete clauses suppress wages and hinder economic dynamism, while the two Republican commissioners opposed the ban, claiming the agency exceeded its powers. In response to the decision, the FTC is considering an appeal and plans to continue addressing noncompete agreements through enforcement actions. The ruling in Texas followed a similar block in Florida for certain plaintiffs, while a judge in Pennsylvania upheld the FTC’s authority to enforce the ban in a separate case. The outcome of these cases may be appealed and potentially reach the Supreme Court.
