Federal Judge Partially Blocks FTC's Noncompete Ban Rule

A federal judge in Texas has partially blocked the FTC's rule that would ban noncompete agreements, citing the lack of power to adopt broad rules. This affects 30 million workers. The rule is contested by business groups and is set to take effect in September.

A federal judge in Texas on Wednesday partially blocked a U.S. Federal Trade Commission rule from taking effect that would ban agreements commonly signed by workers not to join their employers' rivals or launch competing businesses. U.S. District Judge Ada Brown in Dallas said in a written decision the FTC, which enforces federal antitrust laws,

lacked the power to adopt broad rules prohibiting practices that it deems unfair methods competition.

About 30 million people, or 20% of U.S. workers, have signed noncompetes, according to the FTC. Brown, an appointee of Republican former President Donald Trump, blocked the FTC from enforcing the rule against

a coalition of business groups including the U.S. Chamber of Commerce, the country's largest business lobby, and tax service firm Ryan, pending the outcome of their consolidated lawsuits.

The rule is set to take effect in September.