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Groups sue to block FTC’s new rule barring noncompete agreements

In a lawsuit filed in Texas federal court, the U.S. Chamber of Commerce and other organizations argue that the agency lacks the authority to issue the rule

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Updated April 24, 2024 at 6:10 p.m. EDT|Published April 24, 2024 at 11:10 a.m. EDT
The Federal Trade Commission is facing a challenge to its authority, with business groups filing a lawsuit to stop a new rule that would ban noncompete agreements. (Alex Brandon/AP)
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The U.S. Chamber of Commerce and other business groups on Wednesday sued the Federal Trade Commission over a new rule that would make most noncompete agreements illegal, setting up a potential showdown over the scope of the agency’s authority.

The lawsuit, filed in federal court in the Eastern District of Texas, comes a day after the FTC voted 3-2 to issue a rule that bans noncompete agreements, which restrict workers from switching employers within their industry. The agency estimates that 30 million workers are bound by the agreements, and proponents of the ban say it will raise wages, bolster innovation, foster new businesses and reduce health-care costs.