New Federal Ban on Non-Competes Faces Challenge From U.S. Chamber

By: Ioannis Pashakis

The U.S. Chamber of Commerce has filed a lawsuit against the FTC, alleging overreach, following its ruling to almost entirely ban non-compete agreements. Jonathan Landesman, chair of our Labor & Employment Group, spoke with the Central Penn Business Journal, commenting on the FTC’s ruling regarding non-compete agreements, noting its significance as a major shift in employment law during his 25-year career. He observes that the ruling represents a departure from traditional legal norms, effectively limiting the applicability of non-compete agreements to only a select group of employees. Jon also suggests that the ruling is likely to face substantial legal scrutiny from business groups, raising questions about its legal standing and potential implications for businesses.

The U.S. Chamber of Commerce filed a lawsuit on Wednesday against the Federal Trade Commission over a new ruling expected to ban nearly all non-compete employee agreements. 

The ruling, voted 3-2 by the FTC and announced on Tuesday, requires companies with existing non-compete agreements to inform current and past employees that they will not enforce those agreements. 

The suit, filed in a Texas federal court, alleges that the FTC lacks the power to adopt the rule. 

The U.S. Chamber of Commerce called the ruling a dangerous precedent for government micromanagement of business.