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Texas judge partially blocks FTC's non-compete clause

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Diving certificate:

  • A federal judge in Texas on Wednesday granted a tax consulting firm’s request for Federal Trade Commission's interim injunction against the nationwide ban on non-competition clauses in employment contracts and has suspended its effective date for the plaintiffs.
  • Judge Ada E. Brown of the U.S. District Court for the Northern District of Texas ruled that the FTC's ban violated the Administrative Procedure Act and exceeded its statutory authority. She said the ban was “more likely than not” to be arbitrary and capricious.
  • Brown said the injunction is limited in scope to the plaintiffs and plaintiff-intervenors named in the lawsuit; it is not a nationwide injunction. She added that the court will rule on the merits of the agency's lawsuit on or before August 30, 2024.

Diving insight:

FTC voted along party lines to approve the ban in April, and several lawsuits against the agency followed. Apart from RyanThe US Chamber of Commerce also sued the FTC shortly after the ban was announced, but a The judge has suspended the lawsuit last month because Ryan was submitted first.

This is an evolving story.

Anna Harden

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