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Federal Judge Pauses Noncompete Ban

The Biden administration’s bid to ban noncompete agreements received a setback this month, according to POLITICO Pro (subscription).

What’s going on: “In a 33-page opinion, U.S. District Judge Ada E. Brown said the [Federal Trade Commission] does not have the authority to set rules governing competition issues.”

  • In April, the FTC voted to finalize a rule that would prohibit noncompete agreements between employers and their workers. It had been set to go into effect Sept. 4.
  • But the ban has already caused companies’ costs to surge, and if finalized would disrupt manufacturing, according to a 2023 NAM survey.

Limited effect: “Brown … made it clear that her order is limited to the entities challenging the rule in the case before her, and not nationwide. Those include tax prep company Ryan LLC, the Business Roundtable, the U.S. Chamber of Commerce and two Texas business groups, but not their individual member companies.”

  • The judge’s ruling pauses the implementation of the ban during the legal challenge but does not block it entirely.

NAM in action: In May, the NAM Legal Center filed an amicus brief asking a Texas federal court to stay the ban, saying it would expose manufacturers’ trade secrets and could jeopardize hiring and talent retention.

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