Business Groups Challenge FTC’s Noncompete Agreement Prohibition Law

The FTC’s new rule prohibiting the use of noncompete agreements is being challenged by business groups. They argue that these agreements are necessary to protect intellectual property and accuse the FTC of overstepping its regulatory boundaries. The Chamber, Business Roundtable, Texas Association of Business, and Longview Chamber of Commerce have filed a lawsuit against the FTC in the U.S. District Court for the Eastern District of Texas.

Noncompete agreements benefit both employers and workers by safeguarding investments in the workforce and sensitive information while providing employees with increased training, access to more information, and the opportunity to negotiate higher pay. This legal action follows recent legal challenges by the Chamber against the Consumer Financial Protection Bureau over a new rule that would limit credit card late fees imposed by major issuers to $8, a significant reduction from the average $32 late fee. The Chamber alleges that the bureau exceeded its authority in issuing the rule.

The outcomes of these legal battles may not be determined until after President Biden completes his term or if he is replaced by former President Trump in 2024 presidential election. However, they highlight a notable difference in approach between President Biden and potential Republican candidate Trump on issues such as noncompete agreements and consumer protection laws.