Noncompetes back in business after judge blocks FTC ban

A Florida judge blocked the Federal Trade Commission’s rule that would ban noncompete agreements, marking a legal roadblock for the agency.

U.S. District Judge Timothy Corrigan out of Ocala, Florida, temporarily blocked the FTC’s rule Wednesday after a hearing. He kept the agency from applying the order on real estate owned by Properties of The Villages in the Sunshine State.

Properties of the Villages has claimed in a lawsuit that the FTC lacks the jurisdiction to ban noncompete clauses, asserting that only Congress can restrict noncompetitive practices.

Noncompete clauses or agreements are legal contracts that prevent employees from participating in certain activities with a rival company. The FTC says these agreements hurt worker mobility and intimidate employees, while business owners say noncompetes are necessary to protect confidential information and trade secrets.

The FTC announced its ban on noncompete clauses in April, planning to implement the rule in September. If fully realized, it would ban noncompetes in California, North Dakota, Minnesota and Oklahoma.

In July, a federal judge in Texas blocked the rule from applying to the U.S. Chamber of Commerce and a collection of other business groups.