Just as the Chamber of Commerce said it would after Tuesday’s ban on noncompete agreements, it has filed a lawsuit against the Federal Trade Commission, stating that the agency does not have the authority to dictate rules that define unlawful approaches to competition. The Business Roundtable, the Texas Association of Business and the Longview Chamber of Commerce joined the lawsuit, which was filed in Texas, and a Dallas tax services company, Ryan LLC, filed a suit in another Texas court.
In the lawsuit, the Chamber claims the ban of noncompete clauses—which state that an employee cannot work for a competitor or start their own competing business within a certain period of time after leaving a company—is unlawful and called it “a vast overhaul of the national economy and applies to a host of contracts that could not harm competition in any way.”
Commission spokesperson Douglas Farrar issued a statement said that the FTC’s authority on the matter is “crystal clear,” as the agency has been authorized by Congress to prevent unfair methods of competition. “Addressing noncompetes that curtail Americans’ economic freedom is at the very heart of our mandate, and we look forward to winning in court,” he said.
The ban applies to all workers in all roles, with the exception of executives in “policy-making decisions” who make at least $151,164 a year and already have a noncompete agreement in place. However, new agreements cannot be put into place when hiring executive roles. The ban will become law 120 days after it is published in the Federal Register, but the legal battle could push it off for a while.
