Judge Blocks Federal Ban on Workers No-Compete Clauses

Less than a month before the ban was set to begin on September 4th, a Texas Federal Judge has blocked the Federal Trade Commission's move to get rid of no-compete clauses.

   Judge rules ban would "cause irreparable harm"

For a number of months, the FTC's proposed ban has been making its way towards being enacted, navigating several court challenges.

The ban would do away with all forms of no-compete clauses for US-based workers. No-compete clauses vary in length, but they prevent a worker from immediately joining a competing or potentially competing business.  Many workers in TV and radio media have had them over the years. For example, a no-compete would prevent radio station A from hiring away the very successful and popular morning show from radio station B.

If a non-compete worker wanted to leave, they would have to 'sit out' for a specified period before they could join a competing business.

Now, the FTC wants to do away with the bans. The FTC estimates about 1 in 5 American workers (30 million) have some kind of no-compete clause. They're usually found in higher-level or professional industries.

Get our free mobile app

Texas Judge Ada Brown ruled, in part (according to The Verge):

"US District Judge Ada Brown in Dallas, Texas ruled that the antitrust agency exceeded its statutory authority to ban practices related to unfair methods of competition, saying the noncompete agreements ban is “unreasonably overbroad without a reasonable explanation,” and would “cause irreparable harm.” Brown’s decision now stops the FTC from blocking noncompetes nationwide after initially delaying the ban with a preliminary injunction in July."

If the FTC chooses to appeal this decision, it would next go to the 5th Circuit Court of Appeals.