The Federal Trade Commission (FTC) under President Joe Biden's administration, sent shockwaves through the business world earlier this year when it announced a ban on non-compete agreements.
The announcement was monumental, especially in certain industries like the tech sector.
"Noncompetes block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand," FTC Chair Lina Khan said in April when it was announced.
However, according to The Post Millennial, the ban was just blocked by a Texas-based federal judge, who ruled that the FTC exceeded its authority in issuing the bombshell decision.
Judge Ada Brown of the US District Court for the Northern District of Texas held nothing back in her ruling this week, explaining why she believes the FTC lacked the authority to issue such a decision.
"The FTC lacks substantive rulemaking authority with respect to unfair methods of competition. The role of an administrative agency is to do as told by Congress, not to do what the agency think[s] it should do," the judge's ruling read.
"The Commission’s lack of evidence as to why they chose to impose such a sweeping prohibition ... instead of targeting specific, harmful non-competes, renders the Rule arbitrary and capricious," she added.
Federal judge rules that the FTC ban on no competes is not legal. Our federal government continues to be struck down by the courts for unconstitutional or illegal actions. We need an administration that care about the law and the constitution. pic.twitter.com/53uFPfQoIe
— Matt Nachtrab (@MattNachtrab) August 20, 2024
Not surprisingly, the FTC wasn't thrilled with the judge's ruling.
"Today’s decision does not prevent the FTC from addressing noncompetes through case-by-case enforcement actions," FTC spokesperson Victoria Graham.
It was noted that the FTC is "seriously considering a potential appeal," though it's unclear when that would take place.
Users across social media offered mixed reactions to the federal judge's ruling.
"Nice work guys! The FTC's attempt to end-run the legislative process (and Constitution) was bound to fail and glad Gibson Dunn was there to do it," on X user wrote.
Another X user wrote, "You should be ashamed of yourself you cretin. Chaining people down to a job and then not allowing them to work in their field is un-American."
