A federal judge has struck down lame-duck President Joe Biden’s sweeping ban on noncompete agreements.
The ruling is another sobering blow for the president as he shuffles toward the end of his term.
The block was issued by Texas Judge Ada Brown, a President Donald Trump appointee.
Brown blocked the ban from taking effect in September.
The judge’s ruling applies nationwide.
About 30 million Americans are under non-compete agreements.
The agreements prevent employees from going to work for competitors.
Biden’s Federal Trade Commission (FTC) enacted the ban in May along partisan lines.
The move sparked challenges from business groups including the Chamber of Commerce.
Those in favor of the FTC rule say it is good for workers.
However, opponents say it stretches the federal agency’s authority and could expose trade secrets.
In a win for the challengers, Judge Brown found the rule’s sweeping scope “arbitrary and capricious.”
“The Commission’s lack of evidence as to why they chose to impose such a sweeping prohibition … instead of targeting specific, harmful noncompetes, renders the Rule arbitrary and capricious,” Brown wrote.
The White House blasted the judge’s ruling as a win for big corporations and special interests.
In a statement, Biden’s Press Secretary Karine Jean-Pierre said:
“The Biden-Harris Administration will keep fighting to empower workers to choose where they work, to start a business, and to get the pay they deserve, and continues to support the Federal Trade Commission’s ban on noncompete agreements.”
The noncompete ban is part of an aggressive anti-trust agenda being pursued by Biden’s FTC chair, Lina Khan.
Some Republicans have painted Khan as hostile to free markets.
However, she has won praise from some populists on the right, including GOP vice presidential candidate J.D. Vance.
The Chamber of Commerce called Brown’s ruling “a significant win in the Chamber’s fight against government micromanagement of business decisions.”
In a statement, Chamber President and CEO Suzanne Clark said:
“A sweeping prohibition of noncompete agreements by the FTC was an unlawful extension of power that would have put American workers, businesses, and our economy at a competitive disadvantage.”
FTC spokesperson Victoria Graham said the agency would consider an appeal.
“We are disappointed by Judge Brown’s decision and will keep fighting to stop noncompetes that restrict the economic liberty of hardworking Americans, hamper economic growth, limit innovation, and depress wages,” Graham said.
“We are seriously considering a potential appeal, and today’s decision does not prevent the FTC from addressing noncompetes through case-by-case enforcement actions.”
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