Federal Judge in Pennsylvania Upholds FTC Ban on Noncompete Agreements

‘The plain text of the FTC Act clearly provide us rulemaking authority to ban noncompete clauses,’ an FTC spokesperson told The Epoch Times.

The Federal Trade Commission (FTC) building in Washington, on Sept. 19, 2006. Paul J. Richards/AFP via Getty Images

A federal judge in Pennsylvania rejected a request by a tree service company to block the Federal Trade Commission’s (FTC’s) ban on noncompete contracts on grounds of regulatory overreach, diverging from a Texas federal court’s decision that found the FTC exceeded its authority with the ban and setting up a potential showdown before the U.S. Supreme Court.

U.S. District Judge Kelley Hodge in Philadelphia wrote in a July 23 order that the FTC has the power “to prevent unfair methods of competition in commerce” under the 1914 Federal Trade Commission Act, an authority that extends contracts that prevent employees from working for rivals or starting a competing business after they leave their jobs.