DALLAS (CelebrityAccess) — A federal decide in Texas has blocked a brand new rule from the Federal Commerce Fee (FTC) that bans the usage of Non-Compete clauses in employment contracts.

The clauses, which generally ban former staff from becoming a member of or launching rival firms, are a typical fixture of employment contracts throughout the reside leisure business.

In keeping with Reuters, U.S. District Decide Ada Brown in Dallas dominated that the FTC doesn’t have the statutory authority to ban enterprise practices that it deems unfair by adopting broad guidelines.

Moreover, Decide Brown’s ruling notes that whereas Congress expressly granted the FTC authority underneath the Magnuson-Moss Act of 1975 to create substantive guidelines barring unfair practices, that authority doesn’t prolong to unfair strategies of competitors.

As effectively, the court docket concluded that the FTC’s rule was “unreasonably overbroad” and failed to deal with potential alternate options.

The FTC’s prohibition on non-competes was scheduled to take impact on Sept. 4.

Brown was nominated to the Federal Bench by former President Donald Trump in 2019.

The choice was lauded by Suzanne Clark, President and CEO of the U.S. Chamber of Commerce, a plaintiff within the case.

“This choice is a big win within the Chamber’s battle towards authorities micromanagement of enterprise selections,” U.S. Chamber of Commerce President and CEO Suzanne P. Clark stated. “A sweeping prohibition of noncompete agreements by the FTC was an illegal extension of energy that might have put American staff, companies, and our economic system at a aggressive drawback. We stay dedicated to holding the FTC — and all companies — accountable to the rule of legislation, making certain American staff and companies can thrive.”

A rep for the FTC instructed Reuters that an attraction of the choice was into account.