U.S. District Judge Ada Brown ruled that the FTC 'exceeded its statutory authority' in its new rule on noncompete agreements, calling it 'arbitrary and capricious.' This ruling blocks the FTC from enforcing the rule.
The FTC voted to prohibit employers from creating new noncompete agreements, claiming such agreements restrict workers' freedom and suppress wages, while companies argue they are crucial for protecting trade secrets.
The Texas court's decision against the FTC highlights a growing concern among employers who depend on noncompete agreements to safeguard their business relationships and investment in employee training.
Following this ruling, FTC spokesperson Victoria Graham mentioned that although the rule is blocked, the agency can still pursue noncompete agreements on a 'case-by-case' basis and may appeal the court's decision.
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