The U.S. Chamber of Commerce has taken a stand against a new federal rule that would ban employers from requiring workers to sign noncompete agreements. In a lawsuit filed in federal court in Texas, the Chamber argues that the Federal Trade Commission does not have the authority to implement such a sweeping rule.
According to the Chamber, the ban on noncompete agreements would have negative consequences for businesses, leading to increased legal costs and hindering their ability to protect investments. They also warn of potential harm to the economy, as start-ups and small businesses may struggle to prevent larger firms from poaching their top talent and confidential information.
The lawsuit comes on the heels of a similar legal challenge from tax service firm Ryan LLC, indicating growing opposition to the FTC rule. While the commission and its supporters argue that banning noncompete agreements will benefit workers by increasing earnings and fostering the creation of new businesses, opponents contend that such agreements are essential for safeguarding company interests.
Legal experts predict that the legal challenges to the FTC rule will likely delay its implementation, regardless of the final outcome. The Chamber may seek an injunction to temporarily block the rule while the case is ongoing, further prolonging the debate over the controversial issue.