A US judge has blocked the Federal Trade Commission’s ban on non-compete agreements, saying the regulator lacked the authority to stop agreements that bar employees from getting new jobs at rival firms.
The rule “is arbitrary and capricious because it is unreasonably overbroad without a reasonable explanation”, US District Judge Ada Brown in the Northern District of Texas wrote in the decision on Tuesday, concluding that the regulator “lacks statutory authority” to issue the rule.
FTC spokesperson Victoria Graham said in a statement that the agency was “disappointed” by the decision but vowed to “keep fighting to stop non-competes”.
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