In Washington – ACMA Insider – March 2, 2024

Lawsuit Seeks to Block Biden Administration Ban on Non-Compete Agreements

The U.S. Chamber of Commerce has filed a lawsuit to prevent the Biden Administration from stopping the use of non-compete agreements.  The Federal Trade Commission issued a final rule on April 23 banning the use of these agreements, stating it would lead to more innovation and allow Americans “the freedom to pursue a new job, start a new business, or bring a new idea to market.”  

No new non-competes may be entered into after August 21, 2024, and existing non-competes will no longer be enforceable, except for existing non-competes with “senior executives.” Senior executives are defined as workers in a policy making position with annualized cash compensation of at least $151,164.   

The Chamber announced the lawsuit against the Federal Trade Commission (FTC) the same day the agency voted to ban employer noncompete agreements. According to the Chamber, the FTC’s action sets a dangerous precedent for government micromanagement and will harm employees, employers, and the economy. 

In a statement, the Chamber argued that businesses face a regulatory onslaught as federal agencies pursue aggressive policy changes through regulation, preventing them from innovating, growing, and hiring. They need clear rules so they can focus on serving their customers and supporting their communities instead of navigating a maze of extraneous rules and regulations. 

“Since its inception over 100 years ago, the FTC has never been granted the constitutional and statutory authority to write its own competition rules. Noncompete agreements are either upheld or dismissed under well-established state laws governing their use,” said U.S. Chamber President and CEO Suzanne P. Clark. “Yet, today, three unelected commissioners have unilaterally decided they have the authority to declare what’s a legitimate business decision and what’s not by moving to ban noncompete agreements in all sectors of the economy.”