On Tuesday, a federal judge failed to uphold a pause on blocking non-compete agreements enacted by the Federal Trade Commission (FTC).
A U.S. District Judge in Pennsylvania said in a written decision that the FTC does indeed have the power to ban practices it deems “anti-competitive”, claiming that the use of non-compete agreements does indeed fall under that category.
According to the FTC, 30 million people, about 20% of the American workforce, have signed non-compete agreements.
The decision that the commission does have the ability to ban the practice — which is common in the broadcasting and media industries — comes on the heels of a decision from a federal judge in Texas earlier this month blocking the proposed ban by arguing the opposite of what the Pennsylvania judge claimed.
The practice of non-compete agreements has been a controversial one in recent years. Opponents argue it limits the employment prospects of those saddled with the clause, with a commission spokesperson saying the practice harms “competition by inhibiting workers’ freedom and mobility while stunting economic growth.” Other opponents say non-competes suppress wages and violate anti-trust laws.
Meanwhile, proponents believe the clauses are tools for businesses that help keep investments in employee recruitment and training, as well as a way to keep information confidential and protect business secrets.
After the decision by the Pennsylvania judge, the ban on non-compete agreements is expected to take place in September. Many states — including California, Minnesota, Oklahoma, and North Dakota — have already banned the practice, while other states have enacted limits on uses of the clause. The FTC ban would enact a nationwide ban.
