A federal court has rejected a Federal Trade Commission regulation that banned non-compete agreements between employers and employees under most circumstances.

In a suit brought in Texas by the U.S. Chamber of Commerce, the Business Roundtable, the Texas Association of Business, and others, the court found that the FTC exceeded its authority in promulgating the regulation and that the rule itself was “arbitrary and capricious,” based on limited evidence, and without either a rationale for such a sweeping approach nor any evidence that the agency considered a more limited approach to the challenges it identified as the basis for advancing the prohibition.

Learn more from the Bloomberg Law article “FTC Ban on Worker Noncompete Deals Blocked by Federal Judge” and the federal court decision in the case.

Non-compete agreements are common among hospitals and other health care entities.

Other challenges to the ban have been filed and adjudicated, with a Pennsylvania court denying any relief from the regulation and a Florida court granting relief from the regulation only to the plaintiffs in the case.  The conflicting rulings suggest that the Supreme Court may eventually become the final voice in the matter.