Latest News: Federal Judge Upholds FTC Ban on Noncompete Agreements

Judge Timothy Corrigan Dismisses FTC's Motion to Dismiss

On August 14, 2024, Judge Timothy Corrigan of the federal district court in Florida denied the Federal Trade Commission's (FTC) motion to dismiss a lawsuit challenging the agency's ban on noncompete agreements.

Background of the Case

In 2023, the FTC issued a rule prohibiting employers from imposing noncompete agreements on their employees. The rule aimed to promote competition and worker mobility in the labor market.

However, several companies and business groups challenged the rule, arguing that the FTC lacked the authority to issue it.

Key Ruling

In his 33-page opinion, Judge Corrigan agreed with the plaintiffs, finding that the FTC did not have the statutory authority to issue the noncompete ban rule. He stated that the FTC's interpretation of its authority was "unreasonable."

Implications of the Ruling

The ruling is a setback for the FTC's efforts to promote competition and protect workers. It means that employers can continue to use noncompete agreements to restrict employee movement and protect their trade secrets.

Statement from FTC

The FTC has issued a statement expressing its disappointment with the ruling. The agency stated that it is "reviewing its options" and may appeal the decision.