FTC’s Non-Compete Ban Face Legal Challenge from Business Groups in U.S.

The U.S. Chamber of Commerce and other trade groups have filed a lawsuit against the U.S. Federal Trade Commission (FTC) in opposition to the regulator’s decision to ban non-compete agreements. The coalition, which includes the Business Roundtable, the Texas Business Association, and the Longview Chamber of Commerce, argues that the ban will harm their ability to protect confidential information and invest in their workforce. They are seeking to overturn the rule and prevent the FTC from enforcing it.

In a 3-2 vote, the FTC approved a new rule that prohibits most non-compete agreements that restrict workers from going to a competitor for a certain period of time and in a certain geographic region. The FTC maintains that its legal authority is clear and that addressing non-competitive issues is within its mandate.

The legal battle between regulators and business groups is likely to continue for months, leaving employers uncertain about the future of non-compete agreements. Roula Khalaf, editor of the FT’s Editor’s Digest newsletter curates this weekly newsletter on regulatory issues.

The Chamber of Commerce has been vocal in its criticism of the FTC’s move to ban non-compete agreements, arguing that they are governed by well-settled state laws rather than federal regulations. According to estimates by the FTC, about 30 million workers in the US are currently bound by non-compete agreements, affecting not only senior executives but also hourly workers such as bartenders and security guards.

The outcome of this legal battle will have significant implications for American workers, particularly those who rely on these types of contracts for financial stability or job security. As one industry expert put it: “This decision could have far-reaching consequences for businesses across all sectors.”