In response to a ruling that would eliminate all current and future noncompete agreements, two powerhouse associations have taken joint legal action against the Federal Trade Commission (FTC).  The Business Roundtable and the US Chamber of Commerce filed the lawsuit within a day of the announcement that within the United States, there would be a ban against employers holding current and former employees to these contracts.  The accusations presented in the filing focus on the level of authority maintained by the FTC to implement such a ban and whether the government agency overstepped its role.    

The FTC works to ensure that companies exercise fair business practices, uphold antitrust laws, and protect consumers.  The Business Roundtable and the US Chamber of Commerce, however, advocate on behalf of corporations and CEOs, independent from the government.  The Longview Chamber of Commerce in Longview, Texas serves as a third plaintiff in the case, and with the additional plaintiffs, seeks an injunction to either pause the enforcement of the ruling during litigation or prevent the rule from ever going into effect.  If no action is taken, four months, or 120 days, after the new ban is printed in the Federal Register, the rule will be enforced.  

According to the plaintiffs’ argument, the FTC should not be allowed to uphold a ruling without the approval from Congress.  In addition, the FTC ban does not afford specific exceptions, aside from open noncompete contracts for senior executives, and will impact all US companies.  If the lawsuit does not settle in the plaintiffs’ favor, all existing noncompete agreements would prove illegitimate.  Although that potential outcome is definitive, during this delay in enforcement or while litigation is ongoing, employers and employees may be at extreme odds over the validity of any existing or proposed contracts.  Knowledge of the FTC’s ruling may lead employees to consider their rights and refuse to sign.