Challenging the New Rule: Business Associations Sue FTC over Noncompete Agreement Ban and Presidential Differences in Regulatory Approaches.

A group of business associations is challenging a new rule that bans the use of noncompete agreements. They argue that these agreements are necessary to protect intellectual property and that the Federal Trade Commission (FTC) has overstepped 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.

The lawsuit states that 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 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 the 2024 presidential election. However, they highlight a notable difference in approach between President Biden and potential Republican candidate, former President Trump. The FTC contends that the ban on noncompete agreements will enable approximately 30 million Americans, equivalent to 18 percent of the U.S. workforce, to seek new job opportunities within their industry and potentially earn higher incomes. For more information on these developments, refer to Taylor Giorno’s coverage on The Hill.