Lawsuit filed by business associations against FTC for banning noncompete agreements

Business groups are challenging a new rule that prohibits the use of new noncompete agreements, arguing that these agreements are essential for protecting intellectual property and accusing the FTC of exceeding its regulatory authority. The Chamber, Business Roundtable, Texas Association of Business, and Longview Chamber of Commerce have filed a lawsuit against the FTC in the U.S. District Court for the Eastern District of Texas.

According to the lawsuit, noncompete agreements benefit both employers and workers by safeguarding workforce investments and sensitive information for the employer, while providing workers with increased training, access to information, and opportunities to negotiate higher pay. This legal action comes on the heels of the Chamber’s lawsuit against the Consumer Financial Protection Bureau for imposing a new rule that would cap credit card late fees at $8 for the largest issuers, a fraction of the usual $32 late fee.

As these cases unfold, they underscore a contrast between President Biden and former President Trump, with implications that may persist leading up to the 2024 election. The FTC asserts that the ban on noncompete agreements will allow approximately 30 million individuals, or 18% of the U.S. workforce, to switch jobs within their industry and increase their earnings.

These legal battles highlight the ongoing debate over the role of government regulation in protecting workers’ rights and promoting economic growth. The outcome of these cases could have far-reaching effects on businesses, workers, and the overall regulatory framework in the United States.