Judge Strikes Down FTC’s Ban on Noncompete Employment Agreements, Calling It ‘Arbitrary and Capricious’
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variety.comTodd Spangler NY Digital Editor A federal judge shot down the FTC‘s rule banning noncompete agreements, a setback for the agency’s effort to free workers from restrictive employment contract terms.
The commission said it is considering an appeal. The FTC issued a rule banning noncompete clauses in employment contracts in the U.S.
in April, and the action was immediately challenged in court. On Tuesday, Judge Ada Brown of the U.S. District Court in Dallas ruled that the FTC’s rule was “unreasonably overbroad without a reasonable explanation.” The new rule had been set to go into effect Sept.
4. “The Court concludes that the FTC lacks statutory authority to promulgate the Non-Compete Rule, and that the Rule is arbitrary and capricious.
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