Federal Judge Announces Bombshell New Ruling

Photo by Colin Lloyd on Unsplash

(FixThisNation.com) – A federal judge has dismissed the attempt to block the Federal Trade Commission’s (FTC) rule banning non compete agreements. The FTC’s rule which had been issued in April puts a ban on new noncompete agreements. It also notes that companies need to inform both former and current employees that any non-compete agreements currently in place are not going to be enforced. The only exception to this rule is for senior executives with existing noncompetes. 

Around 30 million people, or 18 percent of the U.S. workforce are affected by noncompete agreements which are present in various industries and positions. 

ATS Tree Services sought to delay the rule’s September 4 effective date and requested a preliminary injunction in May. 

U.S. District Judge Kelley Hodge in Philadelphia has now ruled that the FTC does have the necessary authority to prevent unfair competition according to the 1914 Federal Trade Commission Act. This includes noncompete agreements that block employees from getting work with competitors or starting their own businesses. 

Hodge noted that the ATS had not demonstrated a reasonable likelihood of success when arguing that the FTC did not have the necessary authority. FTC spokesperson Douglas Farrar welcomed the ruling, affirming that the FTC Act grants the commission rulemaking authority to ban noncompete clauses. As he argued these clauses limit worker mobility and are stunting economic growth.  

ATS’s attorney, Josh Robbins, expressed disappointment and vowed to continue challenging the FTC’s authority. He further claimed that this ban was harmful to ATS’s business and was affecting employee training.

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