Previous, the FTC was warned by the U.S. Chamber of Commerce regarding a lawsuit it plans to file. The world's largest business group kept its promise since it officially filed legal action against the Federal Trade Commission.
FTC Faces Lawsuit Over Its Noncompete Clauses Ban
The US Chamber of Commerce kept its word, filing a lawsuit in a US District Court in Texas on Wednesday, Apr. 24. According to The New York Times, the business organization argued that the consumer protection agency overstepped its authority.
The USCC explained that the FTC wasn't authorized to issue policies defining unlawful competition methods. In this new lawsuit, the US Chamber of Commerce is supported by other business organizations.
These include the Texas Association of Business, the Longview Chamber of Commerce, and the Business Roundtable. They filed their legal action just a day after the agency approved the noncompete clauses ban, with a final vote of 3-to-2.
The US Chamber of Commerce said that the FTC has no power to issue a ban against noncompete agreements between employees and employers. It added that if the FTC even did, its ban would be unlawful.
Read Also : FTC Votes in Favor of Ban Against Noncompete Agreements That Prevent Employees From Working for Competitors
FTC Bans Almost All Noncompete Agreements
NPR reported that the FTC banned almost all noncompete employment agreements on Tuesday, Apr. 23. This is because these agreements usually prevent employees from leaving their current jobs to join their employers' competitors.
In addition, these noncompete clauses prevent them from leaving their positions to launch their own companies or businesses. The FTC said it decided to approve the ban after receiving over 26,000 public comments regarding noncompete agreements.
"We heard from employees who, because of noncompetes, were stuck in abusive workplaces," said FTC Chair Lina Khan.
"One person noted when an employer merged with an organization whose religious principles conflicted with their own, a noncompete kept the worker locked in place and unable to freely switch to a job that didn't conflict with their religious practices," she added.
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