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FTC Ban on Anti-Worker Noncompete Clauses Stalled by Trump Judge

The judge signaled she would likely block the rule in its entirety with her final decision in the case on August 30.

FTC Chairwoman Lina Khan testifies during a House Appropriations Subcommittee on Financial Services and General Government hearing in Rayburn Building on May 15, 2024.

A Trump-appointed federal judge on Wednesday partially blocked a Federal Trade Commission rule banning most noncompete clauses, ubiquitous anti-worker agreements that prevent employees from moving to or starting their own competing businesses.

Judge Ada Brown of the U.S. District Court for the Northern District of Texas issued a preliminary ruling preventing the ban from taking effect against the handful of plaintiffs that sued the FTC over the rule mere hours after it was finalized in April. The plaintiffs include the tax service firm Ryan LLC and the U.S. Chamber of Commerce, the nation’s largest corporate lobbying organization.

Researchers at the Revolving Door Project noted Wednesday that Ryan LLC was “represented by [former President Donald] Trump’s Labor Secretary, Eugene Scalia, via BigLaw firm Gibson Dunn.”

Watchdogs accused the U.S. Chamber, which celebrated Wednesday’s decision, of “judge-shopping,” a tactic the organization frequently uses to secure favorable legal outcomes. District courts in Texas fall under the purview of the 5th Circuit Court of Appeals, which is dominated by right-wing extremists.

In her Wednesday decision, Brown did not immediately grant the plaintiffs’ request for a nationwide injunction against the ban on noncompetes. But the judge signaled she would likely block the rule in its entirety with her final decision in the case on August 30 — just days before the ban’s scheduled implementation date.

“The court concludes the commission has exceeded its statutory authority in promulgating the noncompete rule, and thus plaintiffs are likely to succeed on the merits,” Brown wrote in her 33-page decision.

A spokesperson for the FTC said in response to the ruling that the agency stands by its “clear authority, supported by statute and precedent, to issue this rule.”

“We will keep fighting to free hardworking Americans from unlawful noncompetes, which reduce innovation, inhibit economic growth, trap workers, and undermine Americans’ economic liberty,” the spokesperson added.

The FTC, led by antitrust trailblazer Lina Khan, estimates that roughly 30 million U.S. workers are bound by noncompete agreements that restrict their ability to switch jobs in pursuit of higher wages and better benefits. The commission believes its ban on noncompetes would result in up to $488 billion in wage increases for U.S. workers collectively over the next decade.

Progressive advocacy groups cast Wednesday’s decision as the latest attack on workers — and gift to corporations — by a Trump-appointed judge.

“By halting the noncompetes ban, this court is standing in the way of real gains for workers again,” said Emily Peterson-Cassin, director of corporate power at Demand Progress. “With the decision overturning Chevron earlier this week, it’s a one-two punch against everyday people.”

Tony Carrk, executive director of Accountable.US, said in a statement that “the industry-funded U.S. Chamber continues to cost everyday Americans a ton of money with its suing spree against the Biden administration crackdowns on corporate greed, junk fees, and anti-worker barriers.”

“The U.S. Chamber’s lawsuit holding up the administration’s credit card late fee rule is already costing Americans $27 million a day — and now this latest lawsuit could slam the door shut for millions of American workers to begin pursuing better opportunities,” said Carrk. “Noncompete clauses could force employees to endure low wages and poor working conditions as the rule drags through the courts. The big bank and Wall Street CEOs on the U.S. Chamber’s board have gotten a huge return on their investment while American workers pay the price.”

“The need for judicial reform in Congress has never been more clear as far-right 5th Circuit territory judges have effectively put up a giant neon sign, ‘Corporations, Please Sue Here.'”

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