The U.S. Chamber of Commerce and several other business groups on Wednesday sued the Federal Trade Commission in Texas federal court over the commission's vote to ban noncompete clauses, which are used to block employees from leaving to work for competitors in the same industry.
On Tuesday, the FTC voted to enact the ban on the basis that noncompete clauses stifle the efficiency of the labor market, hinder competition and can lead to higher prices for consumers.
The business groups claimed that the FTC's ban, "breaks with centuries of state and federal law."
In addition to the Chamber of Commerce, the Business Roundtable, Texas Association of Business and Longview Chamber of Commerce are all plaintiffs in the suit.
The FTC suggested that instead of relying on noncompete clauses, companies should look to other safeguards of information, like nondisclosure agreements.
Persons:
Lina Khan, Douglas Farrar
Organizations:
House Energy, Commerce, U.S . Chamber of Commerce, Wednesday, Federal Trade Commission, Federal, U.S . Chamber, Eastern District of Texas, Chamber of Commerce, Business Roundtable, Texas Association of Business, Longview Chamber, FTC, CNBC
Locations:
Texas, Eastern District