Chamber, business groups sue FTC to block noncompete ban

A business group led by the U.S. Chamber of Commerce sued the Federal Trade Commission (FTC), challenged the decision to prohibit noncompete agreements.

The FTC passed a rule blocking new noncompete agreements on a 3-2 vote Tuesday. The rule also requires employers to terminate existing non-compete agreements and notify current and former employees that the agreements will not be enforced, but the final rule requires that senior management There are exceptions in place, so senior executives may still be covered by the agreement.

The agency said non-competes would allow 30 million people, or about 18% of the U.S. workforce, to change jobs within the industry and earn more.

But business groups argue that non-compete agreements are necessary to protect intellectual property and have accused the FTC of overreach.

“These agreements benefit both employers and workers. Employers protect their investments in the workforce and confidential information, and workers receive enhanced training, access to more information, higher and benefit from the opportunity to negotiate wages,” the plaintiffs said in the lawsuit.

“While some members of Congress have recently taken an interest in this issue and proposed legislation to establish national rules regarding non-compete agreements, those proposals have never received a vote in committee, much less in Congress. “It has not received a vote from both houses of Congress. Without such an enabling law, federal agencies have not previously taken on the role of regulating non-compete agreements on a national scale,” the complaint adds. There is.

The chamber, Business Roundtable, Texas Business Association, and Longview Chamber of Commerce filed suit against the FTC in the U.S. District Court for the Eastern District of Texas.

The new rules were scheduled to take effect within 120 days, but a legal challenge means that deadline will be extended.

The chamber has been at the forefront of legal challenges to the Biden administration’s policies aimed at large corporations.

Last month, the chamber sued the Consumer Financial Protection Bureau to block a new rule that caps credit card late fees charged by the largest issuers at $8, part of an average late fee of $32. The pro-corporate lobbying giant also accused the agency of overstepping its authority when it issued the rule.

It remains to be seen whether these cases will be resolved in time for the 2024 presidential election, but they draw clear comparisons between President Biden and former President Trump, the likely Republican nominee.

“Workers should have the right to choose who they want to work for,” Biden wrote on X after the FTC passed the non-compete bill.

But Biden is still battling the notion that his predecessor would handle the economy better. A CBS News poll of 2,159 Americans released last month found that only 38% rated the economy in good shape under the Biden administration, compared to 65% under the Trump administration. I answered that.

The move to ban non-compete agreements was welcomed by many workers and labor rights advocates, but angered major players in the business world.

“Since its inception more than 100 years ago, the FTC has never been given the constitutional and statutory authority to develop its own competition rules. Noncompete agreements are based on established state laws governing their use. It’s upheld or rejected,” said Suzanne Clark, chamber president and CEO.

“still, [Tuesday], three unelected commissioners have moved to ban non-compete agreements in all sectors of the economy, saying they have the power to declare what is and is not a legitimate business decision. It was decided that. ”

After the lawsuit was filed, Business Roundtable CEO Joshua Bolten said the non-compete ban was “misguided and far exceeds the agency’s statutory authority.”

“When used properly, reasonable non-compete agreements protect important investments in employees, research and development, and innovation,” Bolten said. “By banning most noncompete agreements, the FTC’s rules will discourage investment in workers and make it difficult for companies to compete globally.”

Updated at 11:39 a.m. EDT.