Federal judge in Texas strikes down FTC’s ban on noncompete agreements

Enlarge / Federal Trade Commission Chair Lina Khan arrives to testify before the House Appropriations Subcommittee at the Rayburn House Office Building on May 15, 2024 in Washington, DC. (credit: Getty Images | Kevin Dietsch )

A federal judge in Texas yesterday blocked the Federal Trade Commission’s attempt to ban noncompete agreements that make it difficult for workers to change jobs or start new businesses. Judge Ada Brown in the Northern District of Texas granted a motion for summary judgment that was requested by a tax services firm and business groups such as the US Chamber of Commerce.

“The Court sets aside the Non-Compete Rule. Consequently, the Rule shall not be enforced or otherwise take effect on its effective date of September 4, 2024 or thereafter,” the ruling said.

The judge wrote in a previous ruling that the FTC lacks authority to issue a rule banning noncompete agreements and granted a preliminary injunction. But that previous ruling only postponed the effective date of the rule as it applied to the plaintiffs, whereas yesterday’s order blocks the FTC rule entirely.