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A federal judge in Texas has blocked a new rule from the Federal Trade Commission that\u00a0would have made it easier<\/a>\u00a0for employees to quit a job and work for a competitor.<\/p>\n In a ruling Tuesday, U.S. District Judge Ada Brown granted a motion for summary judgement filed by the U.S. Chamber of Commerce and other plaintiffs, and rejected the FTC\u2019s own petition for a judgement in its favor.<\/p>\n In reaching his decision, Brown concluded that that the FTC \u201cexceeded its statutory authority\u201d in making the rule, which the judge called \u201carbitrary and capricious.\u201d The judge also concluded that the rule would cause irreparable harm.<\/p>\n As a result of the court\u2019s decision, the FTC won\u2019t be able to enforce its rule, which was set to go into effect on Sept. 4, according to the judge\u2019s ruling.<\/p>\n Still, the decision does not prevent the agency from addressing noncompete agreements through \u201ccase-by-case\u201d enforcement actions, said Victoria Graham, an FTC spokesperson.<\/p>\n The FTC is also considering appealing the court\u2019s decision, Graham said.<\/p>\n The\u00a0FTC voted in April to prohibit employers nationwide<\/a>\u00a0from entering into new noncompete agreements or enforcing existing noncompetes, saying the agreements restrict workers\u2019 freedom and suppress wages.<\/p>\n But companies opposing the ban argue they need noncompete agreements to protect business relationships, trade secrets and investments they make to train or recruit employees.<\/p>\n Apart from the Texas case, companies sued the FTC in Florida and Pennsylvania to block the rule.<\/p>\n In the Florida lawsuit, which was brought by a retirement community, the court granted a preliminary injunction, prohibiting enforcement of the rule just for the plaintiff, but not any other company.<\/p>\n In the Pennsylvania lawsuit, the court concluded that the plaintiff, a tree company, failed to show it would be irreparably harmed by the ban and that the company wasn\u2019t likely to win the case.<\/p>\n The divergent rulings mean the issue could end up working its way to the U.S. Supreme Court.<\/p>\n<\/div>\n\nRecommended Newsletter: <\/strong>High-level insights for high-powered executives. Subscribe to the CEO Daily newsletter for free today. Subscribe now<\/a>.<\/div>\n<\/div>\n