After a Texas federal judge ruled against the Federal Trade Commission (FTC) and its Rule seeking to end noncompete bans for workers, a Pennsylvania federal judge has ruled in the FTC’s favor. While Texas Judge Ada Brown issued a preliminary injunction that prevented enforcement of the FTC Rule, stating that the FTC does not have rulemaking authority, Pennsylvania Judge Kelley Brisbon Hodge specified that the FTC does have clear legal authority to prescribe rules as it decides necessary to prevent unfair methods of competition.
This judiciary split presents an uncertain future for the FTC’s noncompete ban, but challenges to the Rule are expected to continue before the ban goes into effect in September. The recent overturning of the Chevron defense, a 1984 precedent-setting Supreme Court ruling that decided courts should defer to the government agency who has the expertise in a given category, is expected to further complicate the FTC’s pursuit of its noncompete ban.
