By Russell Adams
The U.S. Chamber of Commerce and other business groups filed a lawsuit seeking to block a ban on the use of noncompete agreements, kicking off a legal battle over the fate of contracts that prevent most workers from joining rival firms.
The suit, which was anticipated after the Federal Trade Commission issued the ban on Tuesday, has argued that the agency lacks the legal authority to issue the rule. The FTC has historically operated like a law enforcement agency rather than a rule-making body.
The chamber, a lobbying group for many of the biggest employers, was joined by the Business Roundtable and other business groups in its suit, filed in a federal court in Texas.
The ban announced on Tuesday prohibits companies from enforcing existing noncompete agreements on anyone other than senior executives.
The FTC argues that noncompete clauses, which typically prevent workers from taking a new job or starting a business for a period after leaving an employer, hamper competition for labor and result in lower pay and benefits for workers.
Write to Russell Adams at Russell.Adams@wsj.com
(END) Dow Jones Newswires
April 24, 2024 10:08 ET (14:08 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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