Judge Tosses FTC Ban on Noncompete Agreements, Dealing Major Blow to Biden Admin’s Anti-Business Campaign

A federal judge on Tuesday struck down a Federal Trade Commission rule banning employers from offering workers contracts meant to prevent them from joining competitors or launching startups, dealing a significant blow to the Biden administration’s efforts to rein in employment practices that progressives view as unfair toward workers.

Texas Judge Ada Brown ruled that the FTC lacks the authority to enact sweeping competition rules like banning noncompete agreements between businesses and employees. A month ago, Brown temporarily blocked the FTC’s noncompete ban from taking effect after a challenge from the pro-business U.S. Chamber of Commerce, tax firm Ryan LLC, and other plaintiffs.

“The Commission’s lack of evidence as to why they chose to impose such a sweeping prohibition—that prohibits entering or enforcing virtually all non-competes—instead of targeting specific, harmful non-competes, renders the Rule arbitrary and capricious,” Brown said.