The U.S. Chamber of Commerce and other business groups on Wednesday sued the Federal Trade Commission over a new rule that would make most noncompete agreements illegal, setting up a potential showdown over the scope of a federal agency’s authority.
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Groups sue to block FTC’s new rule barring noncompete agreements
But the chamber argues in its lawsuit that the agency lacks the authority to issue such a sweeping and consequential rule, and it is asking the court to overturn it.
“The Commission’s astounding assertion of power breaks with centuries of state and federal law and rests on novel claims of authority by the Commission,” the lawsuit states.
The FTC on Wednesday defended its stance on rulemaking. The agency’s authority to issue the noncompete rule is “crystal clear” said Douglas Farrar, an FTC spokesman.
“This authority has repeatedly been upheld by courts and reaffirmed by Congress,” he said. “Addressing noncompetes that curtail Americans’ economic freedom is at the very heart of our mandate, and we look forward to winning in court.”
This is a developing story and will be updated.