A federal judge in New York has delayed the implementation of a ban on noncompete agreements for workers, originally set to take effect on September 4. Judge Ada Brown of the U.S. District Court for the Northern District of Texas stated that she intends to rule on the ultimate merits of the action by August 30, 2024.
The ban, approved by the Federal Trade Commission in April, prohibits employers from enforcing noncompete clauses in existing employment agreements and bans companies from including them in future agreements. Following the approval by the FTC, the agency was sued by Ryan LLC and the US Chamber of Commerce, among other business groups.
The FTC estimates that around 30 million workers in the US are bound by noncompete clauses in their current jobs, limiting their ability to switch jobs freely, reducing wages, stifling innovation, blocking entrepreneurs, and undermining fair competition.
The US Chamber of Commerce sees the preliminary injunction as a victory, stating that the FTC’s ban on noncompetes is an overreach of its authority. In response, an FTC spokesperson reiterated the agency’s stance on the issue and its commitment to fighting against unlawful noncompete agreements.
Despite the delay in implementation, the court’s order does not prevent the FTC from taking enforcement actions against individual noncompete agreements. This is a developing news story and will be updated accordingly.