Federal judge blocks FTC rule banning noncompete agreements

A federal judge in Texas blocked a Federal Trade Commission rule Tuesday banning noncompete agreements in employment contracts.

The rule, which was set to go into effect Sept. 4, prevents employers from entering into new noncompete agreements or enforcing existing agreements, declaring them an unfair method of competition. Noncompete agreements are provisions in employment contracts that prevent employees from working at or starting competing businesses for a certain period of time after leaving their current employer.

U.S. District Judge Ada Brown, a Trump appointee, ruled the FTC lacked statutory authority to issue the rule, and that the rule was arbitrary and capricious.

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