FTC sued for ban on noncompete agreements
The U.S. Chamber of Commerce and several other business groups filed a lawsuit seeking to strike down the Federal Trade Commission's ban on noncompete agreements last week.
The FTC voted April 23 to enact the ban on noncompetes, which are clauses in employment contracts that prevent employees from working for or setting up their own “competitor” companies in the same industry during or after their current employment for a certain period of time and within a certain geographic radius. One day later, the Chamber filed a lawsuit in federal court in Tyler, Texas, alleging that the FTC does not have the authority to adopt sweeping rules such as the noncompete ban. The FTC is empowered by federal law to enforce existing antitrust laws passed by Congress, the lawsuit alleges, but not to enact rules determining what other type of conduct by businesses is anticompetitive.
"This decision sets a dangerous precedent for government micromanagement of business and can harm employers, workers and our economy," the lawsuit states. "The Chamber will sue the FTC to block this unnecessary and unlawful rule and put other agencies on notice that such overreach will not go unchecked."
Read more: U.S. Chamber of Commerce
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