(FreePressBeacon.com) – Joe Biden is in for a rocky lame-duck period, as a federal judge rejected a Federal Trade Commission (FTC) rule that would have stopped employers from making workers sign contracts that prevent them from joining rival companies or starting their own.
This decision is a setback for the Biden-Harris administration, which supports the idea that such employment restrictions are unfair to workers.
Texas Judge Ada Brown decided that the FTC does not have the power to impose broad rules like banning noncompete agreements.
She had already temporarily halted the rule last month following objections from the U.S. Chamber of Commerce and others.
“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 stated.
The FTC had planned to implement the noncompete ban next month after approving it earlier this year.
Ryan LLC brought up the legal challenge right after the FTC’s decision, which was split along party lines.
FTC spokesperson Victoria Graham expressed disappointment. She stated the agency would continue opposing noncompete clauses that “restrict the economic liberty of hardworking Americans, hamper economic growth, limit innovation, and depress wages.”
“We are seriously considering a potential appeal, and today’s decision does not prevent the FTC from addressing noncompetes through case-by-case enforcement actions,” Graham added.
The FTC had predicted that eliminating noncompetes would enable the launch of over 8,000 new businesses each year and significantly boost patent creation.
This issue is central to FTC Chair Lina Khan’s broader strategy to challenge major tech firms and big corporations through stringent antitrust measures.
Khan, a divisive figure herself, has been criticized for allegedly overreaching the FTC’s regulatory powers and interfering with market dynamics.
“This decision is a significant win in the Chamber’s fight against government micromanagement of business decisions,” stated Chamber of Commerce CEO Suzanne P. Clark.
“A sweeping prohibition of noncompete agreements by the FTC was an unlawful extension of power that would have put American workers, businesses, and our economy at a competitive disadvantage,” she added.
According to the FTC, 30 million Americans—around one in five—are bound by noncompete agreements.
Supporters of banning such agreements point to the success of Silicon Valley’s tech industry, which thrives in California, where state law prohibits noncompetes.
Copyright 2024, FreePressBeacon.com
