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A Texas court has decided to postpone the Federal Trade Commission’s ban on noncompete agreements, siding with plaintiffs who claim the move is an “unlawful power grab.”Noncompete clauses are used in various industries, particularly the tech industry, to prevent workers from taking jobs with the competition or starting their own businesses and potentially taking trade secrets with them.The clauses mean that workers who leave a company are often forced to work outside their field until their noncompete expires, often for less money. “Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned,” FTC Chair Lina M. Khan said when the ban was announced.The FTC voted 3-2 to issue the rule; Democratic appointees Alvaro Bedoya, Chair Lina M. Khan, and Rebecca Kelly Slaughter voted yes, while Republican appointees Andrew N. Ferguson and Melissa Holyoak voted no.The ban did not impact workers with “policy-making authority” that make more than $151,164. It also didn’t require contracts to be rewritten, merely said that the noncompete portion of them was now unenforceable.”The FTC’s blanket ban on noncompetes is an unlawful power grab,” Chamber of Commerce’s chief counsel Daryl Joseffer said in a statement to Bloomberg.” [The ban] defies the agency’s constitutional and statutory authority and sets a dangerous precedent where the government knows better than the markets.”The court granted an injunction on the rule this week and will decide on the case on or before August 30.
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